On the side of recovery optimism, early corporate results for first quarter 2017 (Q1’17) from sector leaders in the Nigerian Stock Exchange, NSE, have indicated a real rebound may be underway in 2017.
Financial Vanguard’s inquest into the reports turned in to the NSE for Q1’17, indicates general upbeat in turnover and Profit Before Tax, PBT, with companies drawn from various sectors of the NSE posting combined revenue of N1.74 trillion, representing 45 per cent increase against the N1.2 trillion reported in the corresponding period of 2016 (Q1’16).
The companies, numbering 62, accounting for the largest capitalization in the stock exchange, also recorded combined PBT of N270.92 billion, representing 36.9 per cent increase over N197.9 billion in Q1’16.
The results, both the turnover and pre-tax profit of the companies, outperformed the latest GDP and inflation figures, thereby affirming the position by the World Bank and the Minister of Finance, Mrs. Kemi Adeosun, who said that Nigeria is already coming out of recession.
Also, the CBN governor, Mr. Godwin Emefiele, had last month said that the country will come out of recession in the second quarter of the year.
The inflation figure has improved from a high of 18.6 per cent by end 2016 to 17.26 per cent at end of Q1’17 (March), while the GDP though a contraction at -1.30 per cent in year-on-year, yoy, in Q4’16, is an improvement over the previous quarter when the number contracted -2.24 per cent.
Also the CBN’s latest Manufacturing PMI index at 51.1 index points for the month of April, 2017 compared to 47.1 points recorded in March, showed recovery in the private sector.
The PMI index showed that of the 34 sub-sectors surveyed in the manufacturing and non-manufacturing sectors, 20 sub-sectors recorded growth in activities, while 14 sub-sectors recorded decline in activities.
Breakdown of the Q1’17 corporate results showed that the oil and gas sector led turnover in percentage terms, rising by 86.3 per cent to N297.4 billion in Q1’17 as against N159.7 billion in Q1’16, far outperforming the nation’s inflation rate and gross domestic product (GDP).
The consumer goods sector followed with 81.8 per cent increase to N225.63 billion against N124.14 billion recorded in Q1’16, while the agriculture sector ranked third, rising by 70.2 per cent to N9.7 billion in Q1, 2017 from N5.7 billion turnover posted in Q1’16.
Banking sector dominates revenue, profit size
Further breakdown showed that the banking sector led in absolute figures delivering N1.002 trillion revenue in the quarter compared to N753.43 billion in the corresponding period in 2016, but indicating 33 per cent growth. This is also showing about 58 per cent of the total revenue of all the companies.
The oil and gas sector followed far behind with N297.4 billion revenue compared to N159.7 billion, while the consumer goods sector came third with turnover of N225.63 billion as against N124.14 billion in Q1’16.
On profitability of the businesses during the period, the industrial goods sector came top in percentage growth. The sector recorded N12.62 billion in pre-tax profit, representing 276 per cent increase against N3.36 billion recorded in Q1’16.
The agriculture sector came second with N4.16 billion PBT, up 98 per cent against N2.1 billion in Q1’16, while the banking sector came third with percentage increase of 32.2% in PBT to N227.40 billion from N172.04 billion. All three sectors that led profitability beat both the inflation and GDP numbers.
Again, the banking sector topped others in absolute terms as it recorded N227.4 billion PBT. Again this represents a predominant sector performance controlling over 84 per cent of the total PBT posted by all the companies.
The banking sector PBT was trailed distantly by the consumer goods sector with N19.33 billion and the industrial goods sector that achieved N12.62 billion in PBT.
Banking sector leaders
Measured in percentage term, Zenith Bank Plc led in revenue in the sector, recording 49 per cent growth to N147.74 billion, thus accounting for 15 per cent and 8.4 per cent of the banking sector revenue and overall turnover of the 62 companies respectively. UBA followed with 40 per cent revenue growth to N101.3 billion, accounting for 10.1 per cent and six per cent of the sector’s and overall turnover respectively. GT Bank placed third with 39 per cent increase to N104.7 billion, representing 10.5 per cent and six per cent of the sector’s and overall turnover respectively.
Jaiz Bank Plc led in terms percentage growth in profit before tax during the period. The bank’s pre-tax profit rose by 175 per cent to N203.68 million. It was followed by Stanbic IBTC Holdings Plc with 78 per cent PBT growth to N18.6 billion. Again GT Bank came third, recording 64 per cent increase to N50.4 billion in Q1’17.
Insurance sector improved with mixed results
However, the insurance sector sustained its lack-luster performance into the fourth year though it made some upshot beginning the year in Q1’17 with 16.5 per cent revenue growth. Specifically, the 12 insurers that have so far released their earnings reports recorded combined N44.01 billion revenue in Q1’17 as against N37.78 billion in Q1’16, thereby underperforming inflation, but above GDP figure. The sector’s turnover also showed about 25.3 per cent contribution to the overall companies’ turnover.
But the PBT ended in the negative region as the sector pooled N3.86 billion in pre-tax profit compared to N4.2 billion, indicating 10.6 per cent decline. While the sector underperformed inflation and GDP on both fronts, it accounted for mere 1.4 per cent of the overall PBT.
Nevertheless, the sector saw a mixed performance by most of the insurers as some of them had massive decline in either revenue or PBT while Cornerstone Insurance, a key player in the sector, recorded outright loss before tax, with the figure deepening by huge 95.4 per cent.
Prestige assurance led in revenue growth rate, recording 68.8 per cent increase while Regency Alliance Insurance came second with 53 per cent revenue growth, followed by Axa Mansard Insurance with 47.8 per cent increase.
Analysis of pre-tax profit in the sector showed that Sovereign Trust topped others in growth rate with huge 1,007 per cent increase, followed by Unity Kapital Assurance, which recorded PBT growth of 399.7 per cent, while Wapic Insurance ranked third with 135.1 per cent growth.
Oil & Gas bounces back to strong revenue
The Oil and Gas sector recorded a total turnover of N297.4 billion in Q1’17, up 86.3 per cent from N159.7 billion recorded in the corresponding period of 2016.
This accounted for 17.1 per cent of the overall turnover of the 62 corporates for the period.
The companies captured in this first batch of analysis included Forte Oil Plc, Total Nigeria Plc, Oando Plc, Caverton Offshore Support Group Plc, Mobil Oil Plc, Seplat Petroleum Development Plc, BOC Gases Plc and Capital Oil Plc.‘
A breakdown showed that Oando led the sector in absolute figures delivering N138.3 billion turnover in the quarter, thus accounting for 46.5 per cent of the overall turnover. It was followed by Total Nigeria Plc with a turnover of N80.5 billion, accounting for 27 per cent of the sector’s turnover. Forte Oil, posting N33 billion, came third and accounted for 11 per cent of the sector’s turnover.
In percentage terms, Oando also led with a growth rate of 574.6 per cent. It was followed by Total Nigeria Plc with a growth rate of 34.8 per cent, and BOC Gases came third, rising by 27.8 per cent to N601 million from N470 million.
In terms of pre tax, the sector recorded a total of N1.4 billion in Q1 2017 from a loss of N15.3 billion in Q1 2016.
Total Nigeria led in absolute figures with N4.3 billion, representing 307 per cent of the overall sector’s profitability. This was principally because some of the corporates had recorded huge losses especially Seplat, Oando and Capital Oil, which diluted the sector’s PBT. Trailing behind was Forte Oil with a PBT of N2 billion, accounting for 143 per cent of the sector’s PBT.
In percentage terms, BOC Gases led the sector’s PBT , rising by 73 per cent to N83 million from N48 million in Q1, 2016. It was followed by Caverton, up by 70 per cent to N355 million from N209 million in Q1, 2016, while Forte Oil came third, up by 54 per cent to N2 billion from N1.3 billion in Q1, 2016.
Industrial Goods Sector: Cement manufacturers lead
The industrial goods sector recorded a total turnover of N98.14 billion in Q1‘17, showing an increase of 63.23 per cent against the corresponding period of 2016.
Further breakdown showed that Lafarge Africa Plc led the sector in absolute figures delivering N81.3 billion in Q1, 2017 and accounted for 83 per cent of the sector’s turnover. This was followed by Ashaka Cement at N8.8 billion, accounting for 9 per cent of the sector’s turnover, while Sokoto Cement recorded N4.4 billion, accounting for 4.5 per cent of the sector’s turnover
On percentage terms, Ashaka Cement led turnover growth rate, rising by 144 per cent to N8.8 billion in Q1 2017. It was followed by Lafarge Africa, up by 55 per cent to N81.3 billion. The Paint and Coating Manufacturers Plc occupied the third position, rising by 24 per cent to N888 million.
In terms of PBT, the Industrial Goods sector recorded a total of N12.6 billion, showing a growth rate of 276 per cent from N3.36 billion in Q1 2016.
Lafarge Africa led the sector profitability in absolute figures with N9 billion and accounted for 71 per cent of the sector’s PBT. Trailing behind is Ashaka Cement with N2.4 billion, accounting for 19 per cent of the sector’s PBT, while Sokoto Cement occupied third position, accounted for 5.4 per cent of the sector’s pre tax.
On percentage terms, Ashaka Cement led, rising by 722 per cent in Q1 2017 PBT. It was followed by Lafarge Africa rising by 350 per cent, while Sokoto Cement occupied third position on the chart, rising by 92 per cent.
Agric companies sustain growth rate
The Agric sector recorded a total turnover of N9.7 billion in Q1’17, representing an increase of 70.2 per cent from N5.7 billion in Q1 2016. Three leading companies in the sector captured in this batch of analysis included Livestock Feeds Plc, Okomu Oil Plc and Presco Plc.
Okomu Oil Plc led the sector in absolute turnover figure at N5.9 billion accounting for 61 per cent of the total sector turnover. It was followed by Livestock Feeds with a turnover of N3.1billion, accounting for 32 per cent of the sector’s turnover, while Presco recorded N700 million, accounting for 7 per cent of the sector’s turnover.
On percentage growth in turnover, Presco led the sub sector with a growth rate of 133 per cent, followed by Okomu Oil , up by 79 per cent, while Livestock Feeds occupied the third position recording 48 per cent increase in turnover.
On profitability, Okomu Oil led the sector recording N3.4 billion and accounting for 82 per cent of the sector’s profit, followed by Livestock Feeds with N26 million, accounting for 6 per cent of the sector’s PBT.
On percentage terms, Livestock Feeds led the sector growing profit by 767 per cent, followed by Presco with a growth of 150 per cent, while Okomu Oil grew by 113 per cent.
Consumer goods companies also in mixed performance
Companies in consumer goods sector that have released their Q1’17 results are Champion Breweries, Nigeria Breweries, UAC Plc, Unilever, and Cadbury. Others are Nestle Plc, Dangote Flour, Nascon Plc, Tantaliser Plc, and GSK Consumer.
Total Q1’17 revenue of the ten companies stood at N225.6 billion, up by 82 per cent from N124.14 billion. Their combined profits declined by 28 per cent to N19.33 billion, while the turnover rose by 81.8 per cent to N225.63.
When compared with the 17.26 per cent inflation rate for the year, the sector recorded positive revenue growth and negative profitability.
The sector accounted 12.9 per cent of the total revenue of the 62 companies and 7.0 per cent of the total profit for the period.
In terms of revenue growth rate, Dangote Flour topped with 163 per cent growth to N29 billion, as Nestle came second with 69 per cent growth to N61.2 billion, while salt giant, NASCON, came third with 42 per cent growth to N6.4 billion.
Nigeria Breweries, however led the sector’s revenue in absolute term, posting N91 billion revenue. The company accounted for 40 per cent of the sector’s revenue, and 5.2 per cent of the overall total revenue.
Nestle came second with N61.2 billion accounting for 27 per cent of the sector’s revenue and 3.5 per cent of the total revenue of the 62 companies.
Dangote Flour came third with revenue of N29 billion. The company accounted for 13 per cent of the sector’s revenue and 1.6 per cent of the total revenue of the 62 companies.
Measured in percentage term, Dangote Flour also led in profitability growth, recording 125 per cent growth to N3.9 billion from loss of N936 million in Q1’16.
Nestle came second with 55 per cent increase in profit to N14 billion, while NASCON came third with 23 per cent growth to N1.2 billion.
Nigeria Breweries, measured in absolute figure, led the sector in terms of profit for the quarter, with N17.4 billion. The company accounted for 43 per cent of the sector’s profit, and 6.2 per cent of that of the 62 companies combined.
Nestle came second with profit of N14.3 billion accounting for 37 per cent profit.
Dangote Flour came third with profit of N3.9 billion accounting for 10 per cent of the sector’s profit and 1.5 per cent of the total profit of the 62 companies.
InfoTech companies in lack-luster performance
Infotech companies that have released their Q1’17 results are E-Transact, NCR Plc, Chams Nigeria Plc and Computer Warehouse Group Plc (CWG).
Their combined revenue for the quarter rose moderately by 13.8 per cent to N7.4 billion, but total pre-tax tax profit declined sharply by 79 per cent to N76 million.
Compared to the inflation rate, the sector recorded negative revenue growth. The sector accounted for a meager 0.4 per cent of total revenue and 0.2 per cent of the total profit of the set of 62 companies under review.
In terms of percentage growth in revenue, E-transact led with 25 per cent growth to N2.8 billion, accounting for 38 per cent of the sector’s revenue and 1.03 per cent of total revenue of the 62 companies. NCR came second with 16 per cent revenue growth to N1.95 billion, accounting for 26.4 per cent of the sector total and 0.1 per cent of the 62 companies’ overall turnover.
CWG was the only company that recorded growth in profitability with 93 per cent increase in pre-tax profit to N27 million in Q1’17. Chams slipped into loss of N89 million during the quarter.
Construction/Real Estate Sector still in red, but …
Three companies have released their Q1’17 results namely UPDC Plc, Abbey Plc and Julius Berger Construction Plc. The combined revenue stood at N36.5 billion, up marginally by 6.7 per cent from N34.2 billion. The sector accounted for 1.9 percent of the total revenue of the 62 companies under review.
UPDC recorded highest revenue growth in percentage terms growing by 189 per cent to N1.97 billion, while Abbey Building came second with 8.6 per cent revenue growth to N338 million. Julius Berger Plc recorded marginal growth of 2.7 percent to N34.5 billion.
However, the construction giant, Julius Berger recorded the highest revenue in absolute term, accounting for 93 per cent of the sector’s revenue but just 1.9 per cent of the total revenue of the 62 group of corporates. UPDC came second, accounting for 5.2 per cent of the sector’s revenue.
On profitability, only Abbey Building recorded positive growth of 109 per cent, with a pre-tax profit of N19.9 million. UPDC recorded more losses, which rose to -N1.2 billion while Julius Berger reduced its losses to -N17.1 million from N1.1 billion in Q1’16.
Source – nigeriatoday.ng