Nigerian businesses struggled to wade through the realities of a tough economic environment in the first-quarter (Q1) of 2016 despite that their shareholders and customers’ remained hopeful in the country’s worst times ever.
In the first-quarter (Q1) to March 31 2016 companies reported wide profit variance against the corresponding period in 2014 as weaker than expected sales spurred their profits to cave in.
BusinessDay tracking of the result flows at the Nigerian bourse show MRS Oil reported Q1 revenue of N25.07billion (up 17.5%); Profit After Tax (PAT) rose by 185.3% to N626million. Seplat revenue dipped by 35.12% to N16.58billion while its PAT declined to N2.97billion, down 161.7percent. Nestlé Nigeria Plc revenue rose to N36.130billion in Q1’16 from N27.556billion in Q1’15. Profit Before Income Tax rose to N8.725billion from N3.487billion in Q1’15.
“Nestlé Nigeria plc posted a solid 31% growth in revenue, notwithstanding the challenging operating environment in the first quarter of 2016. The performance is testimony to the strength of its brands and its ability to provide value for consumers who are negatively affected by macroeconomic challenges. The reduction in the cost of sales, net finance cost and internal cost saving initiatives contributed a positive evolution of net profit during the period,” the company said in an email statement to the Nigerian Stock Exchange (NSE).
FCMB Group plc reported N2.207billion profit before minimum tax and income tax from N5.769billion in Q1’15. Sterling Bank plc profit before taxation stood low at N2.806billion in Q1’16 from N4.041billion in Q1’15. Diamond Bank plc profit before income tax declined to N6.693billion from N8.367billion in Q1’15. Access Bank Profit Before Tax (PBT) rose by 36.7percent to N22.6billion from N16.52billion in Q1’15.
From the financial to non-financial sectors, the story is not different, since their Q1 results season commenced at the Nigerian Stock Exchange (NSE) and exposed disappointing earnings with the exception of a few outliers.
Wema Bank plc profit before tax declined to N505.329million from N615.288million in the corresponding period of 2015. The first-quarter result of Lafarge Africa plc shows a Loss Before Tax (LBT) of N2.215billion from a N6.089billion PBT in Q1’15. Fidelity Bank plc profit before income tax from continuing operations declined to N4.025billion from N4.710billion in Q1’15.
“Softer macroeconomic conditions and higher provisioning sees banks facing a tough year ahead. The 2016 budget assent and implementation should give rise to positive macro environment. Inflationary impact remains a concern,” Bismarck J. Rewane, MD/CEO, Financial Derivatives Company Limited said at the Lagos Business School Executive Breakfast Meeting.
While declining consumer spend impacted on consumer goods earnings, some banks reported weakness in their non-interest income line – in addition to impacts of impairments on their Q1 earnings.
The Cement Company of Northern Nigeria plc reported a 19.5% decline in Q1 revenue to N3.57billion and PAT decline of 61.6% to N243million. Chemical and Allied Products reported N1.84billion or 2.2% growth in Q1’16 revenue, while its PAT declined by 13.21percent to N422million. Julius Berger reported N28.7billion revenue, down 34% while the company’s PAT stood low at N251million, or a 75.6 percent decline against the corresponding quarter of 2015.
“While investors have macroeconomic issues to contend with, moments such as this can, in our view, demonstrate the importance of investment diversification,” said research analysts at Lagos-based investment house, Dunn Loren Merrifield.
United Capital analysts said: “While we expect a quiet start, as investors return from a long weekend, we envisage demand for equities will pick-up in the course of the short week, as investors continue to take positions on Q1-16 earnings. We note that Q1 has thrown up some positive surprises in terms of earnings performance from counters such as Nestle and Access, and think further surprises may spur demand in the near term.”
Transcorp Plc recorded N13.19billion first-quarter revenue, an increase of about 32.03% and PAT of N1.206billion, up 45.03%. eTRANZACT recorded N2.26bn revenue, up 9.06 percent and PAT of N153million, down by 4.99percent.
The first-quarter revenue of Total Nigeria Plc declined to N59.7 billion, down 0.56percent, while PAT rose to N2.82billion, up 529.8percent. Livestock Plc reported N2.09billion revenue in Q1’16, up 11.75%, while its PAT was 83.17% down to N2million.
UACN Plc reported N17.5bn revenue, down by 1.19%, while PAT declined to N1.31, showing 23.06percent decline. Fidson Plc declined to N1.21billion, down by 0.94% while its PAT dipped to N28million, a decline of 31.63percent. Berger Paints Plc reported N24million PAT, a 66% decline and N760million revenue, up 7.67%.
A Gregory Kronsten team of analysts at FBNQuest said in their recent note that they do not see a sharp rebound in oil price in months ahead and so expect that the backlog in unmet FX demand will continue to grow.
The CBN shows that gross official reserves declined by $780million in April on a 30-day moving average basis to $27.1billion. The authorities are struggling to contain the depletion of reserves in the face of strong import demand. The CBN estimated in January that its monthly supply of FX for sale had fallen to $1billion from as much as $3.2billion before the start of the oil price slide in mid-2014.
Culled from BusinessDay
