In September, a cashew processing plant will open in Lagos, Nigeria’s commercial center. Julius Berger, a Nigerian construction company, is diversifying into the agro-processing sector as part of a diversification strategy.
The unveiling was previously scheduled for the second quarter of this year, according to a February regulatory filing in which the company identified Epe, a town on the north side of the Lagos Lekki Lagoon, as the location of the plant.
Julius Berger hopes that the new cashew processing factory will “form the cornerstone” of its agricultural diversification drive. Julius Berger is one of West Africa’s oldest construction firms.
“Julius Berger is pleased and indeed excited to announce to the market that the official launch ceremony of the cashew processing plant would be on September 10, 2022. Julius Berger reiterates that our diversification direction would support the continued success of the Julius Berger Group in the future and align with the strategic objectives of the Government to stimulate value creation in Nigeria,” said the statement by the company.
The plan to diversify away from construction, its core business, came after a difficult fiscal year in 2020, when the coronavirus pandemic disrupted operations and depleted earnings, causing the company’s after-tax profit to plummet 85% to N1.4 billion, its lowest profit in four years.
When the Julius Berger Board of Directors approved the company’s proposal to expand into agro-processing in September 2020, the initiative got underway. Cashew nuts are one of Nigeria’s most exported agricultural products.
According to the National Bureau of Statistics (NBS), Nigeria’s agricultural exports increased by 57.02% to $1.1 billion (N504.9 billion). Cashew nuts contributed $170 million to this total (N72.8 billion). It was also the third most exported agricultural product, trailing only sesame seeds and cocoa beans.
Cecilia Madueke, the company secretary, said the diversification is based on recent developments in Nigeria and reforms undertaken by the federal government.
“The goal of the board of directors and the executive management of Julius Berger is to deliver on that strategy by maintaining and strengthening the company’s competitive advantages in the construction sector, and capital market,” the notice read.
“We had severally advised the market that Julius Berger will be looking into diversification opportunities, based on the emerging developments, political, economical, and structural in Nigeria and the resultant reforms by the governments.
According to its unaudited half-year 2022 earnings report, revenue jumped by about a half to N218.2 billion and net profit by 26.1 percent to N6 billion.
The market value of the company is currently over N41.4 billion, while its outstanding shares are 1.6 billion, priced at N25.9 per unit.