Consumer Goods Stocks

Nigeria Breweries grew revenue in the first quarter of 2021 by 27 percent year on year to N105.7 billion with profit after tax up 39 percent to N7.6 billion. The uptick in revenue was due to increase in the price of malt and beer products.

During the period, gross profit rose 14 percent to N39.7 billion due to higher price of malt and beer. However, 37 percent increase in cost of sales depressed margin. and N16.00 billion rise in raw materials.

Nigerian Breweries’ impressive performance was not enough to shield it from the general overall market weakness as the stock lost 10.55 percent in price between January and April 2021. But between April 21 and May 11, 2021, it gained 9.38 percent . The company’s earnings per share rose to N0.96 from N0.69 in 2020 recording 4.9 percent return on equity.

Target price for Nigerian Breweries is N31.2 per share.

FLOUR MILLS

Flour Mills is one of the few stocks that demonstrated resilience in the bear market. Between January and April 2021, Flour Mills strengthened 15.2 percent, helped by sound fundamentals and renewed interest from local investors who consider the stock cheap enough to warrant renewed entry. In addition, investors increased demand for the stock to position for the company’s 9 months results.

The company’s 2021 Q1 result also gives fillip to its price rally. In it’s nine month’s 2020 account, Flour Mills recorded N555.34 billion revenue, uptr from N423.47 billion in 2019. Cost of sales however rose to N487.89 billion compared with N375.60 billion in 2019. Similarly, sales and distribution expense berthed at N6.25 billion, down from N6.40 billion the previous year. The cost trend was not enough to cut down net profit as profit after tax rose from N8.6 billion to N15.56 billion with earning per share growing from 184 kobo to 385 kobo as investor’s harvested 7.15 percent return on equity.

UNILEVER

Unilever joined other bellwether stocks to trace the bear market track. It depreciated 6 percent between January and April 2021. This is in spite of the company’s 46 percent rise in revenue in 2021 Q1 to N19.4 billion. Unilever’s strength took root in Q3 2019 when it raised price of its products. In 2020, the company launched its new brand of tooth paste and sunlight dish washing liquid, smaller sizes of its knor cubs and new seasoning powder products. The company however recorded N0.5 billion loss after tax after four ( 4) years of unbroken streak of profitability due to increase in cost which led to 28 percent decline in margin.

GUINNESS

In spite of the general bear market, investors of Guinness extracted 51.05 percent gain between January and April 2021 following renewed interests by local investors who took advantage of the cheap valuation and positioned for the company’s nine months results. Guinness recorded 35 percent increase in profit after tax to N1.8 billon due to cost containment. The company’s topline increased by 54 percent to N42.6 billion. This followed some strategic actions that included focus on spiritsg, malts and stout products particularly guinness smooth brand which price was raised .

Guinness is one of the good dividend paying stocks with N1.50 per share and 39.4 percent return on equity to investors.

DANGOTE SUGAR

The optimization strategy embarked upon by Dangote Sugar resonated in sales volume and revenue growth. In the 2021 Q1, sales volume rose 6.9 percent to 731, 701 tonnes from 684, 487 tonnes in 2019. Production volume increased 13.7 percent to 743, 858 tons compared with 645,071 tonnes in 2019. Increase in volume sold led to 33.0 percent rise to N214.30 billion from 2019 revenue announcement of N161.09 billion. Gross profit grew 40.4 percent to N53.75 billion compared to N38.29 billion. Profit after tax rose 33.2 percent to N29.78 billion from N22.36 billion. The acquisition of Savannah Sugar is expected to further beef up shareholders’ value at the end of the financial year. Our research finding shows that Dangote Sugar returned 25.5 percent on equity.

NESTLE

Revenue report for Nestle in the 2021 Q1 shows increase from N70.35 billion to N87.25 billion in spite of rise in cost of sale to N52.51 billion from N38.67 billion and increase in marketing and distribution expenses from N11.04 billion to N11.11 billion. Profit after tax grew from N11.19 billion in 2020 to N12.40 billion with earnings per share up to N15.64 from N14.12.

In spite of the good result, the stock depreciated 5.67 percent in tune with the general weak market sentiment. On the average, investors harvest 105 percent return on equity from Nestle.

NASCON

NASCON’S effort to contain cost and grow revenue and profit is on course. In the 2020 financial year, the company’s revenue rose marginally to N28.01 billion against N27.49 billion in 2019. Profit after tax also rose marginally from N1.88 billion to N2.69 billion. To boost its revenue and profitability, it focused on cost containment in Q1 2021 as cost of sell increased only marginally at N4.92 billion compared with N4.36 billion in 2020 while distribution cost berthed at N1.68 billion compared ŵith N1.36 billion the previous year. Profit after tax grew to N0.72 billion from N0.62 billion with earning per share up to 109 kobo from 95 kobo and 4.32 percent return on equity.