From Ecobank to Unilever, guidance to last week’s half-year results
Earnings season kicked into high gear last week and expectations were low as procrastinators expect second quarter earnings to capitulate to economic uncertainties.
Investors are at the edge of their seats while directors of companies, like archer-men, are notching and drawing the arrows to be sent in the air hissing.
But the question is ‘will the arrows hit the target to the delight on investors’?
Following the stomach-churning performance of stocks since the start of the year, as the All-share Index (ASI) fell below the 28,000 psychological mark to settle at 27,918.59 points, year to date losses widened to 11.17 percent.
Banks margins are expected to be squeezed as the central bank has raised the loan to deposit ratio of lenders to 60.0 percent effective
September.
The consumer goods firms continue to grapple with low consumer purchasing power and decrepit infrastructure that have hindered them from delivering higher returns to shareholders.
Cement makers are thriving amid a slowing economy as Lafarge Africa recorded profit after tax of N9.0 billion in June 2019, from a loss of N3.90 billion, thanks to cost reduction and a steep drop in interest payment obligation, as the company strategic decision to dispose of a beleaguered South Africa unit to the parent company to raise cash and settle its debt has paid off.
Cement Company of Northern Nigeria (CCNN) has been leveraging on its efficient transportation channel to magnify revenue. The company’s net income surged by 180 percent to N7.28 billion as at June 2019.
Ecobank Transnational Incorporated’s net income was up 15.15 percent to N59.49 billion in the period under, thanks to an uptick in fees and commission income and gains on foreign exchange revaluation reserves that help compensate for the slow growth in revenue.
First City Monument Bank (FCMB)’S net income was up 32.15 percent to N7.53 billion in June 2019 from N5.72 billion the previous year.
Wema Bank’s net income was up 43.12 percent to N2.24 billion in the period under review from N1.56 billion the previous year.
The consumer goods numbers are unsurprisingly disappointing because they are the hardest hit from the idiosyncratic risk and policy uncertainties undermining economic growth.
Unilever Nigeria’s net income dipped by 32.15 percent to N1.944 billion as at June 2019, but Flour Mills Nigeria bucked the trend as net income increased by 17.12 percent to N4.20 billion in the period under review from N3.60 billion the previous year.
The miller attributed the impressive performance to a deleveraging exercise that resulted in a reduction in interest expense while total debts dipped.
Earnings of the largest palm oil producers have been falling since the introduction of a new foreign exchange regime in 2017 paved the way for the importation of the product, hence creating intense competition.
Okomu Oil’s net income fell by 37.25 percent to N1.55 billion in the period under review from N2.46 billion the previous year.
It was the end of free money for downstream oil and gas firms when Nigerian National Petroleum Corporation (NNPC) became the sole importer of petroleum product.
Total Nigeria’s net income was down 98.12 percent to N129 million in June 2019 while Mobil Nigeria’s profit after tax dipped by 23.14 percent to N4.17 billion in the period under review as against N5.67 billion the previous year.
Oando Nigeria Plc’s net income slumped by 41.15 percent in the period under review as the company continues to grapple with rising costs and spiralling debt.
Telecommunications companies have maintained their earnings momentum as they recorded doubledigit growth in at the top and bottom lines.
For the first six months through June 2019, MTN Nigeria’s sales increased by 12.12 percent to N566.12 billion, while Airtel’s sales were up 2.2 percent to N112.64 billion in the same reporting period.
Despite the sustained capital flows to the Nigerian economy, the equity segment of the capital market continues to bleed over policy uncertainty and growth concerns as investors remain pessimistic about a possible revival of the domestic bourse.
Figures sourced from the Nigerian Stock Exchange (NSE) showed foreign portfolio deficit, which is a foreign portfolio inflow less outflow, worsened 12 percent to N42.84 billion in the first half of 2019, from N38.41 billion similar periods last year. This is the lowest in the last five years.