Aluminium Extrusion Moves to Surmount Future Challenges
By Uche Obike
Manufacturing companies in the Nigerian economy are certainly not having any fun. The operating environment has increasingly continued to whittle down the probability profile of these companies.
Aluminium Extrusion Industries Plc, a quoted firm on the Nigerian Stock Exchange (NSE) is one of such firms that had suffered under the harsh operating environment.
The situation continued to take serious tolls on the financial performance of the company.
The company's audited financial results for the year ended December 31, 2003 showed a turnover of N406.5 million, as against N46.3 million in 2002, while it recorded a loss after tax of N42.1 million compared with similar loss after tax of N21. I million in 2002.
However, the company has adopted strategic plans to surmount the challenges of the future.
In his words, the Chairman said that "I am confident that with our continued commitment to the company, the challenges of the future will be surmounted."
Investment analysts believe strongly that the shareholders would be encouraged over the new assurance that the company was doing everything within its power to turn-around Aluminium Extrusion Industries to the path of profitability.
In a statement to the shareholders as contained in the company's annual reports and accounts for 2003, the Chairman, Dr. Pascal G. Dozie infrastructure bottlenecks as cog in the wheel of economic growth.
Dozie noted that though some steps had been taken to curb imports of cheap and poor quality products, still a lot needed to be done by the government to save the local industry.
He, however, re-assured the shareholders that despite the environmental hazards associated with business operations in the country, the company was determined to fight the competition and the adverse operational environment.
"The management of the company has been restructured and the emphasis is on improving productivity and capacity utilisation. We have already increased our production substantially through obtaining mill-finished profiles and we have also increased the capacity utilisation of the anodising plant pending when our extrusion capacity can be further enhanced," he said.
Dozie explained that there had been a positive improvement in the company's performance as was evident from The first quarter finance results.
"These trends are likely to continue and we expect to end the year at break-even," he announced.
Despite the constraints, the Chairman disclosed that the company was still viable and sound and was likely to be turned-around in the year, 2004.
He said that the company now imported less of its basic raw materials as it depended more on the use of local billets cast from aluminium scraps to reduce the tremendous effect or continuing fall in selling prices, cashflow and net results.
However, the Chairman said that the availability of aluminium scrap within the country was limited, which restricted the firm from achieving full capacity.
He appealed to the Federal Government of Nigeria to reopen the Aluminium Smelter Company Limited (ALSCON), Ikot Abasi, Akwa Ibom State, whose operations were suspended since 1999.
"If ALSCON is reactivated and reopened, the billet requirements of the company will be sourced locally through efficient casting mix of aluminium ingots with aluminium scraps. This will result in improved performance in the years ahead," he said.
He, however, regretted that "up till the end of 2003, the 100 per cent destination inspection policy was not duly implemented. Cheap, but inferior goods still flooded aluminium market, thus making locally manufactured goods less competitive."
The company's operations were company also adversely affected because of National Electric Power Authority (NEPA) power supply remained epileptic and without any improvement.
"This resulted in your company depending heavily on diesel, generators, which have now become due for major overhaul. In addition there is a need to buy a new 1250KV generator to sustain the operations, for which the company has taken the requisite action," he said,
The company was incorporated on October 26, 1982 and carries on the business of manufacture and sale of all types of extruded aluminium products. Nigerian citizens and associations hold 13 per cent of the share capital, while the balance is held by Imo, Abia and Ebonyi states and Tower Aluminium (Nigeria) Plc.
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