Despite widespread losses over economic recession, about 65 quoted companies on the Nigerian Stock Exchange, which are in the league of blue chip companies, have boosted their profit after tax by N232.5 billion, at the end of the first quarter of 2017.
This represents an increase of 25 per cent when compared to N185.9 billion declared within the same period in 2016.
The companies are Dangote Cement, Nestle Plc, Cornerstone Insurance Plc, Leventis Nigeria Plc, Unilever Plc, Eterna Oil Plc, GTBank Plc, Zenith Bank, FBN Holding, RT Briscoe Plc, Multiverse Nigeria Plc, Medview Airline Plc, Unity Bank Plc, Capital Hotel Plc, Capital Oil Plc, Japaul Oil and Gas, Pharmadeko Plc and Sovereign Trust Insurance Plc, among others.
Some of the companies increased their PAT by over 80 per cent or more at the end of Q1 2017.
For instance, Dangote Cement’s PAT rose from N52.7 billion as at Q1 2016, to N70.572 billion by the end of Q1 2017.
In the case of Nestle, its Q1 profit grew from N6.3billion in 2016 to N8.358billion in 2017.
While GTBank profit went up by 62 per cent to N41.477 billion, Zenith Bank’s appreciated by 41 per cent to N34.499 billion within the period under review.
Eterna Oil’s profit after tax grew by 134 per cent; Unilever declared a growth of 53.8 per cent in its profit, while Africa Prudential’s profit rose by 107.03 per cent in the first quarter of 2017.
Others include Jaiz Bank, which reported N14.4billion in the first quarter of 2017, compared with a lesser figure of N11.3billion in 2016.
Leventis Nigeria Plc’s profit for the quarter also went up from N114.8 million to N139.098million in 2017, while Cornerstone Company recorded N115.2 in 2016 but increased to N242.5million in Q1 2017.
We expect mild recovery in the purchasing power of Nigerians going forward, which will support sales’ revenue of manufacturing companies
MARKET OBSERVERS REACT
A financial analyst and market commentator, Mr. Mike Uzor, attributed the result to continuous injection of dollars into the system, which has helped to boost the manufacturing sector and impacted positively on the companies’ portfolio.
This, he added, had helped the economy with a rebound in the price of crude oil and improvement in forex liquidity, among others. Chief Operating Officer, InvestData Limited, Mr. Ambrose Omorodion, explained that the full implementation of the Federal Government’s four-year economic recovery plan contributed to the development in the capital market.
According to him, it is expected to further boost recovery and return the country to the path of growth and prosperity.
He said, “A special stimulus package for the manufacturing sector is underway in the form of special funds with low interest and special tax system for the sector, which would likely be in form of tax holiday, to enhance productivity and output.
“We expect mild recovery in the purchasing power of Nigerians going forward, which will support sales’ revenue of manufacturing companies.
The Central Bank of Nigeria’s intervention in the forex market and the establishment of the Industrial Development Council by the government to drive industrialisation, would boost productivity and give incentives to the manufacturing companies by way of tax cuts.”
However, Managing Director, Highcap Securities Limited, Mr. David Adonri, expected the companies to perform better than they did in Q1 2017, a situation he attributed to the depressed state of the Nigerian economy over the last two years.
This, he noted, had been broadly reflected in the companies’ result and capital market activities.
He stressed further that foreign investors’ appetite for Nigerian assets had waned significantly on the back of currency crisis which in turn had fundamentally weakened macroeconomic performance, dragged down corporate earnings and also impacted on equity market’s viability.
He said, “The recovery seemed to be coming on the back of the recent increase in crude oil price, the increase in crude oil production in Nigeria and the CBN’s continued supply of foreign exchange to both retail and corporate users.
The expectation is that the current improvement in the macroeconomic environment and the efforts of various stakeholders to promote made-in-Nigeria goods should stimulate economic activity in the short to medium term.”
Having started on a strong footing in Q1 2017 with revenue and profit growth, shareholders of the companies expect them to witness an improvement in their financial performance in the second quarter, saying the rest of the year may offer even more room for upward movement in earnings.
Chairman, Shareholders Trustees Association, Alhaji Muktar Muktar, said the effect of the new foreign exchange policy of the apex bank, as shown in the series of recent interventions to meet the needs in the various segments of the forex market, had benefited the manufacturing sector and helped reduce operating cost, especially importation, thereby boosting productivity.
“Going by the market fundamentals, it is expected that the coming quarters will have more improvement and returns on investment to all shareholders. The comp a n i e s should, as a matter of urgency, reduce the high level of bad loans in the system,” he said.
Q2’LL BE BETTER – COYS
Group Managing Director, FBN Holdings, Mr. Urum Kalu Eke, said, “2016 has been a year characterised by significant uncertainty in the operating environment.
Despite this, FBN Holdings has delivered a solid performance while focusing on addressing the pre-existing issues in the loan book, which resulted in the current loan loss.
“This performance has been achieved through ongoing initiatives in driving efficiency across the various businesses, transforming the risk management and controlling the environment.
Containing cost, as well as enhancing revenue generation from the banking and non-banking subsidiaries are also included .
We expect an improved economic environment through 2017 and are confident that the foundations we have put in place will drive improved financial performance and consequently enhance shareholders’ returns,” he said.
MD, Unilever, Mr. Yaw Nsarkoh, assured that the company would not relent in its efforts to satisfy its consumers and investors. He added that as a company, Unilever would continue to deploy best-practised marketing strategies, with high level of operational intensity.
Listed companies on the NSE are mandated by the capital market regulator to adhere to high disclosure-standards, which include financial information and periodic disclosure on all their activities.
This should also be released to the NSE in a timely manner, to enable it efficiently perform its function of maintaining an orderly market. The rules also require quoted companies to submit interim report, not later than 30 calendar days after the end of the quarter, in accordance with Appendix iii of the Listing Rules.
As at May 18, 2017, 65 companies have released their first quarter results, representing 36 per cent out of 180 companies that have their first quarter ended March 31, 2017
