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Int’l Breweries Grows Profit Despite Economic Challenges

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Nigerian Breweries PLC

Despite the economic downturn that has made most companies to declare less than impressive results, International Breweries Plc has recorded an improvement in its earnings in this half year compare with it performance last year.

Chairman of the company’s Board of Directors, Otunba Michael Daramola, said the company has contributed positively to the nation’s economy in his submission at the 39th annual general meeting (AGM) of the company held recently

According to him; International Breweries recorded an improvement in its earnings in this fiscal year over the last one with a 12.7 percent increase from N20, 649,295.00 to N23, 269,364.00. He said the company also made a profit of 18.2% while earnings per share increased from 59kobo in 2015 to 81kobo in 2016, an increase of 37.3%, courtesy its excellent improvement in Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA).

Daramola, who said within the year under review the company continued to focus on investing for the long term and building on their established brands strong position in the South West, said they also expanded their portfolio with the launch of Eagle Lager, 1960 Rootz and Miller Genuine Draft all of which have been exceptionally well accepted by consumers.

The chairman also noted that the company continues to expand its offering of existing brand to leverage occasions and to satisfy consumers’ needs as they have done with the phenomenally successful launch of the Trophy 375ml pack.

Promising customers to always get best out of products coming from the company, Otunba Daramola stressed the company’s readiness to keep the business focused, saying they would not deter from stretching the corporate scorecards in spite of the deteriorated economic situation.

He said: “the year under review has been both exciting and challenging with our country facing an extremely tough economic landscape. We have experienced inflationary pressures, foreign exchange liquidity issues and consumers have also been faced with severe fuel shortage and long power outages.

“This and the nonpayment of civil servant salaries have had a material impact on our consumers’ disposable income. As a result, competition in the brewing industry has intensified significantly. However a challenging environment often provides opportunity and we have ensured that we have taken advantage of as many of the opportunities we have created, or been presented with, as possible.”

“We will continue to strive to live our core value of ‘People are our enduring advantage’ and the current financial performance can be attributed to the constant exceptional spirit of commitment, dedication and passion of our work force throughout our organisation.

“We have modeled essential skills over the years and focused on retaining talented people. We have built competency frameworks through our International model which has proved very successful. This has provided development opportunities through exchange programmes and secondments for some of our employees in our sister Companies.”

While emphasising on the achievement of the company under the youths empowerment programme, Daramola said in the spirit of giving back to the society, 25youths from across the South-West geopolitical zone of Nigeria have been empowered so as to be self-employed.

According to him, “within the last fiscal year, we launched our Kick start programme which was aimed at empowering our youth to develop enterprises and create employment. The programme ran over the entire fiscal year and involved the training of 120 youths selected from thousands of entries and culminated in an awards luncheon which saw 25 youths awarded grants to empower them to grow their enterprise”.

He, however, expressed optimism that the company would continue to grow despite the economic and market challenges that present themselves to Nigerian. He also promised that the company will grow in line its strategic views, increasing volumes and profitability supported by sound capital investment initiatives and at the same time deliver value to all our stakeholders.

“The year under review witnessed a significant milestone in environmental compliance with the commissioning of our effluent treatment plant which will ensure that all water returned to the environment will have no negative impact on it. We also understand that our profitability depends on communities, growing economies and the responsible use of scarce natural resources. We have integrated these issues into our business through the launch of Prosper and the introduction of our five shared imperatives.”

“The Board has ensured that a robust governance structure is in place to enable the business to succeed and deliver long-term sustainable growth. As part of this responsibility, the Board has set up a Committee on Risk Management to further give direction to foreseeable challenges in the business and best possible approaches to mitigate them.”

He therefore, urged other Directors, management and staff of the company to continue to work assiduously in a bid to continually improve the organisation as well as stretch the company’s corporate scorecards so as to protect their license to trade in the years ahead.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Markets

Flashing Green

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude

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Traders Wall Street

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

We’re seeing green flashing across the board on Thursday, with sentiment buoyed by positive signals on Fed rate hikes and China’s Covid response.

While it could be argued that Jerome Powell’s comments on Wednesday were relatively balanced – slower tightening now but rates high for longer – the last year has proven that anticipating the path of inflation even a short period ahead is incredibly difficult. Knowing what the Fed intends to do next is far more valuable than what it thinks it may do 6-12 months down the line.

And anything that is perceived to reduce to possibility of an interest rate recession is going to be a positive for equity markets. The Fed has every opportunity to tighten more in the months ahead if the data doesn’t play ball. What’s far more difficult is undoing the damage caused by moving too fast now with little to no visibility on how impactful past tightening has been.

Positive signals

The signals coming from China also look very positive. While we shouldn’t expect a dramatic shift in policy from the leadership, particularly before the March Congress, any modest softening in its Covid-zero policy will and should be welcomed. The approach has been extremely damaging to growth and confidence and the protests highlight how public opinion towards it is changing.

We shouldn’t be naive to the fact that a move away from the policy won’t be easy and there’ll be plenty of setbacks. But it’s certainly a step in the right direction that, along with the measures announced to revive the property market, could put the economy on a much better path.

A huge few days for oil markets

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude, another large production cut from OPEC+ this weekend, and China’s evolving Covid stance. There remains considerable uncertainty surrounding all of the above though which will likely ensure prices remain volatile going into the weekend. That could carry more risk than normal if the OPEC+ meeting does go ahead as planned on Sunday and the EU hasn’t agreed to the price cap level by the close of play Friday. The range of possibilities on these two things alone is huge which will make rumours and speculation over the coming day or two all the more impactful.

Gold testing range highs

Gold bulls were particularly happy with Powell’s comments on Wednesday with the yellow metal rallying strongly to trade at the upper end of its recent range. It faces strong resistance around $1,780 though which was a significant level of support in the first half of the year. With so much data to come over the next day or so, it may not prove particularly resilient if traders are given further hope that rates will rise more slowly and peak lower.

Some relief for cryptos

The risk relief rally is coming at just the right time for bitcoin, helping it to recover from the lows to trade around $17,000. This is around the highs of the last few weeks since it settled after its latest plunge. Whether it will be enough to revive interest in the cryptocurrency, I’m not sure. The FTX fallout is continuing to weigh heavily on the space and the prospect of more contagion or scandals is hard to ignore.

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Crude Oil

Oil Revenue into Foreign Reserve Dropped From $3bn Monthly in 2014 to Zero in 2022

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Oil

The official foreign exchange receipt from crude oil sales into Nigeria’s official reserves has dried up steadily from above US$3.0 billion monthly in 2014 to an absolute zero dollar today, the Central Bank of Nigeria (CBN) governor, Godwin Emefiele disclosed.

Speaking at the 57th annual bankers’ dinner organized by the Chartered Institute of bankers of Nigeria (CIBN) in Lagos, the CBN governor noted that there has been a significant loss in foreign reserves due to the naira’s struggle and the rise in demand for forex. 

He added that the sharp increase in the number of Nigerians who are seeking education in foreign countries particularly the UK has resulted in an unprecedented demand for foreign exchange. 

According to him, the number of student visas issued to Nigerians by the UK alone has increased from an annual average of about 8,000 visas as of 2020 to nearly 66,000 in 2022.

Emefiele also lamented about the level of crude oil theft in Nigeria which has significantly affected the country’s oil production. He noted that crude oil theft has adversely impacted the Country’s foreign exchange reserves.

Investors King had earlier reported that Nigeria has lost its coveted position as Africa’s largest oil producer after oil production dropped below the mark of 1 million barrels per day. 

Nigeria currently trails Angola, Libya and Algeria to the fourth position. 

Meanwhile, on the Naira-4-Dollar scheme which the CBN introduced to boost migrant remittances into the Nigerian economy, the CBN governor noted that the scheme has largely been successful. 

“I am happy to note that, so far, the Naira-for-Dollar scheme has been successful in increasing remittance inflows through our registered International Money Transfer Organisation (IMTOs),” he said.

Emefiele also noted that the introduction of the National Domestic Card Scheme (NDCS) will help to reduce the operating cost incurred by commercial banks while using foreign cards. 

It could be recalled that the CBN earlier announced that it planned to introduce Nigeria-made transactional cards to replace well-known cards such as Visa and MasterCard.

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Crude Oil

Crude Oil Gained 2% as U.S. Oil Inventories Dipped Last Week

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Crude Oil - Investors King

Crude oil appreciated on Tuesday on signs global supply is declining amid better-than-expected optimism on Chinese economic recovery and a weaker dollar.

But the likelihood that OPEC+ will leave output unchanged at its upcoming meeting limited the gains.

Brent crude futures rose $2.06, or 2.48% to $85.09 per barrel by 1044 GMT. The more active February Brent crude contract rose by 2.02% to $85.95.

U.S. West Texas Intermediate (WTI) crude futures climbed $1.69, or 2.16%, to $79.89.

Support followed expectations of tighter crude supply.

U.S. crude oil stocks dropped by 7.9 million barrels in the week ended Nov. 25, according to market sources citing American Petroleum Institute figures on Tuesday.

Official figures are due from the U.S Energy Information Administration on Wednesday.

And the International Energy Agency expects Russian crude production to be curtailed by some 2 million barrels of oil per day by the end of the first quarter next year, its chief Fatih Birol told Reuters on Tuesday.

On the demand side, further support came from optimism over a demand recovery in China, the world’s largest crude buyer.

China reported fewer COVID-19 infections than on Tuesday, while the market speculated that weekend protests could prompt an easing in travel restrictions.

Guangzhou, a southern city, relaxed COVID prevention rules in several districts on Wednesday.

A fall in the U.S. dollar was also bearish for prices. A weaker greenback makes dollar-denominated oil contracts cheaper for holders of other currencies, and boosts demand.

Fed Chair Jerome Powell is scheduled to speak about the economy and labour market on Wednesday, with investors looking for clues about when the Fed will slow the pace of its aggressive interest rate hikes.

Capping gains, the OPEC+ decision to hold its Dec. 4 meeting virtually signals little likelihood of a policy change, a source with direct knowledge of the matter told Reuters on Wednesday.

“Market fundamentals favour another cut, especially given the uncertainty over China’s COVID situation … Failure to do so risks sparking another selling frenzy,” said Stephen Brennock of oil broker PVM.

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