In the fiscal year 2023, the Transnational Corporation of Nigeria (Transcorp) reported a substantial twofold increase in net profit, surging to N34.1 billion. The company's unaudited condensed consolidated and separate financial statements, submitted to the Nigerian Exchange Group, revealed this significant growth by the end of December 31, 2023. The surge in annual profits was primarily attributed to a remarkable rise in energy income.
Transcorp, a conglomerate with its core operations centered around the energy sector, contributing 78% to its gross revenue, also has divisions dedicated to agro-allied business and hospitality. The leading subsidiary experienced a noteworthy increase in turnover, escalating from N103.3 billion to N151.3 billion compared to the previous year, ultimately driving the overall gross revenue to a 44% increase, totaling N194 billion. Transcorp Power, a subsidiary boasting a combined installed generating capacity of 2,000 megawatts across three power plants, played a pivotal role in this surge.
However, the company also faced challenges, particularly in finance costs, which saw a surge of approximately 60% for the year. This increase was primarily attributed to heightened expenses associated with servicing foreign debt. The depreciation of the naira's value, resulting from various foreign exchange reforms during the year, adversely affected the conversion rate of the local currency to the dollar.
Despite the surge in finance costs, Transcorp exhibited a robust financial performance. Profit before tax experienced an impressive 84.5% acceleration, reaching N55.9 billion, while post-tax profit advanced to N34.1 billion from the previous N16.8 billion. In the short term, the company's current liabilities surpassed current assets by a substantial 39.2%, amounting to N106.6 billion. Notably, trade and other receivables, representing funds owed by trade partners, witnessed a significant increase to N140.3 billion from the previous N82.6 billion recorded a year ago.
In 2023, Transcorp emerged as the fourth-best-performing stock in Nigeria. Tony Elumelu, the chairman of Transcorp's board of directors, stands as the largest shareholder, holding approximately 36% of the company's stake along with his family.
Isaac Akinloye, a financial analyst at Core Investment, commended Transcorp's strategic resilience amid economic challenges, citing the doubling of annual profits to N34.1 billion as a testament to the company's adaptability and effective leadership under Chairman Tony Elumelu. He emphasized the importance of managing external factors, particularly the notable increase in finance costs attributed to servicing foreign debt amid currency devaluation. Akinloye highlighted Transcorp's positive momentum and diversified portfolio, positioning it as a key player in Nigeria's economic landscape. He stressed that careful financial management would be pivotal for sustained success as the conglomerate navigates funding pressures and liabilities.
In related news, a Transcorp-led consortium acquired a 60% stake in the Abuja Electricity Distribution Company (AEDC). The acquisition followed the issuance of a discharge certificate to the major investor of Ughelli Power Plant by the federal government of Nigeria. The Transcorp-led group, approved as the preferred bidder for AEDC in May 2023 by the national council on privatization, appointed Christopher Ezeafulukwe, the MD/CEO of Transcorp Power Limited, to lead AEDC as managing director and chief executive officer (MD/CEO).
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