New Telegraph

Tantalizers: Operational challenges hurt earnings

Volatility in the overall economic and business climate has confined Tantalizers Plc. to a loss position. CHRIS UGWU writes

 

 

 

The country’s hospitality industry is faced with multiple challenges ranging from poor energy supply and insecurity to misconstrued internal perception, poor customer service and little or no standardisation in operations.

 

Others include inconsistent regulatory environment and skilled labour shortages caused by a few entrepreneurs, who hijack the process, with little knowledge of the workings of the industry to perpetuate plans for their own personal gains.

 

Made worse are the COVID-19 crisis, recent #ENDSARS protests and, above all, infrastructure deficiency, which has inevitably transferred the high production cost to consumers and resulted to less patronage, thereby shrinking the operator’s profit margins.

 

Tantalizers Plc, the only listed fast food company on the Nigerian Stock Exchange (NSE), has been struggling like any other fast food firms in Nigeria due to harsh operating environment.

 

This is because the economy generally is faced with enormous socio-economic challenges.

 

The company’s activities have definitely been impacted on a negative note, majorly due to increase in tariff, double taxation, depreciation in naira and the continued insecurity prevailing in some parts of the country, a situation that has compelled a scaling back of its expansion drive in those regions.

 

Given headwinds such as weak demand on the back of household income, most consumer goods companies in Nigeria have continued to find it difficult to weather the storm.

 

The effect of challenges in operating environment on the economy continued to impact adversely on its operations due to reduction in credit opportunities, increase in cost of sales and administrative expenses, which in turn affected the company’s income.

 

Tantalizers, which returned to profitability in 2017 after being in the red, started the year 2018 negative, slipped back to loss position in the first quarter of the year 2018 ended March 31. It has remained in a state of depression since then.

 

Hope that it would surmount the challenges in 2020 became a mirage as combination of effect of COVID -19 lock down and #ENDSARS protests that crippled the economy confined the food firm at a loss position.

 

The on-trade-channel of the leading fast-food company with over 60 restaurants across Nigeria was severely affected by the pandemic, as the widespread economic vulnerabilities in the nation disrupted the business segment of the company.

 

Market analysts also attributed the company’s inability to get out of the woods to weak consumer demands, stiffer competition and increased administrative cost, which has resulted in slow growth of the company.

 

 

 

 

 

The share price of Tantalizers at the close of trading on Friday stood at 20 kobo per share.

 

Financials

 

Tantalizers returned to loss position in the first quarter of 2018 ended March 31, with a loss of N122.197 million as against a loss of N115.988 billion reported in 2017, accounting for a percentage change of 5.35 per cent.

 

Revenue declined by 18.42 per cent from N490.760 million in 2017 to N400.353 million posted in 2018.

 

Tantalizers Plc has reported a loss after tax of N80.890 million for the first quarter ended March 2019 as against a loss of N122.196 million posted in 2018.

 

The company’s revenue dropped by 23.14 per cent from N400.352 million as against N307.714 million posted in 2019.

 

Cost of sales stood at N194.287 million in 2019 from N231.450 million posted a year earlier, while administrative expenses were N246.749 million reported during the period under review from N306.434 million in 2018.

 

The food firm sustained the loss position in half year of 2018 with a loss after tax of N222.110 million for the half year as against a loss of N320.908 million in 2017.

 

Revenue dropped by 12.52 per cent from N926.329 million in 2017 to N810392 million recorded in 2018. Cost of sales stood at N475.728 in 2018 from N599.583 million recorded a year earlier, while administrative expenses was N594.610,as against N700.118 in 2017.

 

For the Q3 ended September 30, 2018, Tantalizer recorded a loss after tax of N213.533 million as against a profit of N450.624 million in 2017. Net revenue declined by 33.43 per cent from N1.750 billion in 2017 to N1.165 million posted in 2018. Administrative expenses stood at N859.377 million in the nine months from N1.383 billion a year earlier. Cost of sales was N691.451million in 2018 from N1.182 billion in 2017.

 

The company, however, ended the 2018 financial year with a decline of 80.54 per cent in profit after tax to N443.370 million as against N86.256 million posted in 2017. Profit before tax dropped by 78.69 per cent from N450.624 million to N96.024 million. Cost of sales stood at N895.669 million from N1.182 million a year earlier, while administrative expenses stood at N1.063 billion in 2018, from N1.383 million a year earlier, according to report obtained from the NSE. Revenue of the company dropped by 12.86 per cent to N1.525 billion from N1.750 billion in 2017.

 

Tantalizers slipped back to loss to begin the 2019 financial year with a loss after tax of N80.890 million for the first quarter ended March 2019 as against a loss of N122.196 million posted in 2018.

 

The company’s revenue dropped by 23.14 per cent from N400.352 million as against N307.714 million posted in 2019.

 

Cost of sales stood at N194.287 million in 2019 from N231.450 million posted a year earlier, while administrative expenses were N246.749 million reported during the period under review from N306.434 million in 2018.

 

Tantalizers reported a loss after tax of N126.323 million for the half year ended June 30, 2019 as against a loss of N122.110 million posted in 2018.

 

 

 

The company’s revenue dropped by 21.18 per cent from N810.392 million as against N638.752 million posted in 2019.

 

Cost of sales stood at N355.490 million in 2019 from N475.728 million posted a year earlier while administrative expenses was N489.449 million reported during the period under review from N594.610 million in 2018.

The food firm reported a loss after tax of N65.886 million for the nine months ended September 30, 2019 as against a loss of N213.533 million posted in 2018.

 

The company’s revenue dropped by 19.09 per cent from N1.165 billion as against N942.583 million posted in 2019.

 

Cost of sales stood at N531.661 million in 2019 from N691.451 million posted a year earlier.

 

Tantalisers ended the 2019 financial year with a drop of 74.29 per cent in profit after tax to N22.171 million in 2019 to N86.256 million in 2018.

 

Profit before tax stood at N33.431 in 2019 from N96.024 million in 2018, representing a decline of 65.18 per cent. Revenue decreased by 17.1 per cent from N1.525 billion in 2018 to N1.264 billion in 2019. Cost of sales stood at N729.712 million in 2019 from N895.669 million in 2018.

 

Tantalizers began the 2020 financial year also unimpressive with report of a loss after tax of N65.083 million for the first quarter ended March 31, 2020 as against a loss of N80.890 million posted in 2019.

The company’s revenue dropped by 5.56 per cent from N307.714 million as against N290.600 million posted in 2020.

 

Cost of sales stood at N161.064 million in 2020 from N194.287 million posted a year earlier.

 

For the half year ended June 30, 2020, the food firm posted a loss after tax of N135.113 million as against a loss of N126.323 million in 2019.

 

Revenue stood at N433.826 million from N638.752 million in 2019, representing a drop of 32.08 per cent. Cost of sales was N233.157 million as against N355.490 million in 2019.

 

Tantalizers reported a loss after tax of 245 million for the third quarter ended September 30, 2020 as against a profit of N22.17 million posted in 2019.

 

The company’s revenue dropped by 32.28 per cent from N1.26bn as against N855.93 million posted in 2020.

 

 

 

Cost of sales stood at N355.440 million in 2020 from N729.712 million posted a year earlier.

 

Tantalizers reported a loss after tax of N65.083 million for the first quarter ended March 31, 2020 as against a loss of N80.890 million posted in 2019.

 

The company’s revenue dropped by 5.56 per cent from N307.714 million as against N290.600 million posted in 2020.

 

Cost of sales stood at N161.064 million in 2020 from N194.287 million posted a year earlier.

 

Outlook

 

Dr. Jaiye Oyedotun, Chairman of the company, while speaking at the 21st Annual General Meeting (AGM), said: “We are also committed to re-modeling/upgrading of old outlets to increase traffic, using proceeds from disposals. Our drive will be to improve quality in all ramifications.

 

“We will consolidate on franchise growth with better engagement of our existing franchisees through improved communication and innovation, and active recruitment of new ones, particularly in virgin territories. Supply chain remains critical to improvement in the business of our franchisees. We will continue to engage key companies in the Nigerian supply value chain for partnership to provide the much needed materials and logistics. This will satisfy their desire for inputs availability at reasonable costs.

 

“We will bring innovations to bear on the company while aggressively pursuing our marketing plans and strategies. Our products will be brought closer to the consumers via the on-line channels and platforms and we will continue to shift our engagement from the traditional to the new media. We will continue with the disposal of non-income generating assets which has helped to reduce our obligations while bridging our working capital gaps. Our immediate need for equity injection cannot be over-emphasized. All the measures adopted so far are short term to keep the Company afloat.”

Last line

Following growing competition in the market, the management of Tantalizers Plc needs to devise new ways to shore up market share and also strengthen its marketing plan in order to reach new customers.

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