- Manufacturing Sector Faces Gale of Losses
The manufacturing sector is faced with myriads of problems ranging from the scarcity of foreign exchange (forex), high-interest rate and cost of raw materials, unfavorable policies among others, as the bottom-line of the listed equities, especially in the last financial year have remained susceptible to the harsh operating environment facing the agri-business in Nigeria.
Indeed, the most affected was the share price of these firms on the Nigerian Stock Exchange, which had remained stagnated at nominal value year to date following investors’ apathy that have negatively impacted on the demand of the stocks.
The sector is expected to be drive the nation’s economy but as sales revenues and profits decline, manufacturers will cut back on hiring new employees, or freeze hiring entirely. In an effort to cut costs and improve the bottom line, the manufacturer may stop buying new equipment, curtail research and development and stop new product rollouts.
Expenditures for marketing and advertising may also be reduced. These cost-cutting efforts will impact other businesses, both big and small, increase cost of goods and impede economic growth.
For instance, FTN Cocoa Processors Plc, a pioneer status agro-allied company, which came from a loss after tax of N201.195 million for the full Year 2015, also began the 2016 financial in the red, recording a loss after tax of N62.568 million for the first quarter (Q1) ended March 31, 2016.
The figure showed a loss of 1,793 per cent from N3.695 million profits after tax reported in the comparable period of 2015.
The company’s revenue declined by 12 per cent from N387.972 million in 2015 to N341.441 million recorded during the period under review.
The firm maintained its loss position during the half year, as it reported a loss after tax of N151.141 million for the second quarter ended June 30, 2016. The figure accounted for a 310.8 per cent change from N39.065 million losses after tax reported a year ago.
The company’s revenue however, grew by 17.9 per cent from N562.286 million in 2015 to N662.964 million recorded during the period under review.
The Cocoa Processors also ended the third quarter with a loss after tax of N263.352 million for the Q3 ended September 30, 2016, as it continued to struggle with harsh operating environment and declining bottom-line.
The figure showed a 70.1 per cent change from N154.793 million loss after tax compared to 2015.
The company’s revenue in a filing with the Nigerian Stock Exchange, however, declined by 2.5 per cent from N863.837 million in 2015 to N842.139 million recorded during the period under review.
Similarly, Meyer Plc, for the Q3 ended September 30, 2016, recorded N71.73 million loss.
Specifically, the firm posted a loss before tax of N67.7 million, representing 112.6 per cent loss, with a loss after tax of N71.73 million.
The firm’s net assets stood at N613.6 million, 10.5 per cent slide, when compared to N685.3 million in 2015.
PZ Cussons Nigeria Plc also reported a loss after tax of N2.43 billion in its Q1 report for the period ended August 31, 2016
The company posted a loss before tax of N1.58 billion in the review period, while revenue increased 12 per cent to N16.75 billion from M14.95 billion recorded the same period of 2015.
To address the plight of the manufacturers, especially in the areas of foreign exchange stability and boost their share price on the Exchange, industrialists have appealed to the Federal Government to review the forex policy and ensure that there is liquidity in the market.
Aliko Dangote Remains Africa’s Richest Man With $12.1 Billion Net Worth -Forbes
Nigerian industrialist, Aliko Dangote, is Africa’s richest person for the tenth year in a row.
In the Forbes Africa latest billionaires list, Dangote’s total net worth stood at $12.1 billion, a $2 billion increment when compared to last year. Thanks to the 30 percent increase in the price of Dangote Cement share.
Nassef Sawiris of Egypt followed Dangote with $8.5 billion net worth with the majority of his investments coming from construction and other investments.
In third place was Nicky Oppenheimer of South Africa with an $8 billion total net worth.
Portland Paints, Chemical and Allied Products Plc Agreed to Merge
Portland Paints and Products Nigeria Plc and Chemical and Allied Products Plc have agreed to merge, according to the latest statement from both companies.
In a statement released through the Nigerian Stock Exchange, the Board of Directors of CAP said we are “pleased to inform you that following discussions and negotiations, the Boards of CAP and Portland Paints have reached an agreement to undertake a merger between both entities (the “Merger” or the “Proposed Merger”).
Accordingly, we “hereby present to you the terms and benefits of the Proposed Merger for your consideration and seek your support and approval to effect the Proposed Merger.
“The Proposed Merger presents a compelling opportunity to create significant value for shareholders of CAP and achieve the company’s strategic growth objectives as a larger company with a broader product portfolio, more corporate owned brands and diversified revenues.
“The resultant entity is also expected to benefit from enhanced distribution capabilities in addition to economies of scale and operational efficiencies.”
Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17
Tony Elumelu owned Heir Holdings Limited and its related company Transnational Corporation of Nigeria Plc on Friday announced it has completed the purchase of 45 percent stake in Oil Mining Lease (OML 17) through TNOG Oil and Gas Limited.
The acquisition includes all assets of Shell Petroleum Development Company of Nigeria Limited (30 Percent), Total E&P Nigeria Ltd (10 percent) and ENI (five percent) — in the lease.
It was further stated that TNOG Oil and Gas Limited will also have the sole right to operate OML 17.
The field presently has a production capacity of 27,000 barrels per day. Also, there are estimated 2P reserves (proven and probable) of 1.2 billion barrels and an additional one billion barrels in possible reserves — all of oil equivalent.
A consortium of global and regional banks and investors provided a financing component of $1.1 billion for the largest oil and gas financing in Africa in over a decade.
In a statement released on Friday, Shell said the completion was after all the necessary approvals have were received from authorities.
“A total of $453m was paid at completion with the balance to be paid over an agreed period. SPDC will retain its interest in the Port Harcourt Industrial and Residential Areas, which fall within the lease area,” the SPDC said.
Speaking after the completion of the deal, Elumelu said “We have a very clear vision: creating Africa’s first integrated energy multinational, a global quality business, uniquely focused on Africa and Africa’s energy needs. The acquisition of such a high-quality asset, with significant potential for further growth, is a strong statement of our confidence in Nigeria, the Nigerian oil and gas sector and a tribute to the extremely high-quality management team that we have assembled.
“As a Nigerian, and more particularly an indigene of the Niger Delta region, I understand well our responsibilities that come with stewardship of the asset, our engagement with communities and the strategic importance of the oil and gas sector in Nigeria. We see significant benefits from integrating our production, with our ability to power Nigeria, through Transcorp, and deliver value across the energy value chain.
“I would like to thank Shell, Total and ENI, for the professionalism of the process, the Federal Government of Nigeria, the Ministry of Petroleum Resources, and the NNPC for the confidence they have placed in us.”
Tony Elumelu is the Chairman of Heirs Holdings Limited, Transcorp and United Bank for Africa Plc.
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