United Nigeria Textiles PLC is one of the companies still struggling under the Textiles sector. Afprint PLC used to be under this sector too but switched over to Agriculture when they could no longer meet up. The other companies still under Textiles are Aba Textile Mills Plc, Asaba Textile Mill Plc, Enpee Industries Plc and Nigeria Textile Mills Plc. All of them, except UNTL, are moribund on the stock exchange and they all contributed to the 78% returns that was generated in 2007. If they had been active, we could have been quoting figures close to 85% returns. It goes a long way to show that an early turnaround of this sector, which used to be the largest employer of labor in Nigeria, will go a long way in reviving the economy of the country.
My article on the textile industry has prompted me to analyze UNTL, the only company that seem to be active in the sector.
The company released its 9 months results ending September 2007 recently which showed an increase in turnover by 2.2% from N13.58 million to N13.88 million and 1234% increase in loss from N56.65 million to N755.7 million for profit before tax as against the corresponding period in 2006. Obviously there was nothing to tax and the profit after tax showed the same figures. This also means that there was nothing to distribute to shareholders as returns for investment.
The company is presently running on accounting losses but it is still breathing for the fact that it was able to release any result at all. Despite the dreadful financials of the company, lots of speculators were able to make money from capital gains from the share price because of the sudden fad for penny stocks, while many more investors have lost money. The share price has been on a steep decline recently mostly because of the poor results and also because of massive sales by satisfied speculators who are exiting for other opportunities.
The Federal Government is about to splash N70 billion on the textile industry and obviously UNTL which has been holding on tenaciously will have more to gain from it and in the long run will hopefully bring smiles back to the faces of its shareholders.