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United Capital Plc Delivers Decent Q1-2023 Earnings Growth Despite Market Volatility

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United Capital - Investors King

United Capital Plc, a pan-African financial services group and leading investment bank, has set the tone for the Q1-2023 financial declaration period with its recently released Unaudited Financial Statements for the period ending March 31, 2023.

Despite tough financial market conditions, the Group successfully delivered decent top and bottom-line earnings growth, providing a glimmer of hope for investors and the broader market.

The Group’s ability to navigate tough financial market conditions was evident in the stable growth across key income lines, with Gross Earnings rising by an impressive 27% year-on-year to N5.34 billion.

The Group’s Profit Before Tax (PBT) grew by 5% year-on-year to N2.82 billion, while Profit After Tax (PAT) was up 6% year-on-year to N2.44 billion.

Financial Highlights of United Capital Result

❖ Gross Earnings: N5.34 billion in Q1 2023, compared to N4.21 billion in Q1 2022 (27% growth year-on-year)
❖ Net Operating Income: N4.94 billion in Q1 2023, compared to N3.55 billion in Q1 2022 (39% growth year-on-year)
❖ Operating expenses: N2.66 billion in Q1 2023, compared to N1.64 billion in Q1 2022 (62% growth year-on-year)
❖ Profit Before Tax: N2.82 billion in Q1 2023, compared to N N2.69 billion in Q1 2022 (5% growth year-on-year)
❖ Profit After Tax: N2.44 billion in Q1 2023, compared to N2.31 billion in Q1 2022 (6% growth year-on-year)

❖ Annualized Earnings Per Share: 163 kobo. (Q1 2022: 154 kobo)

Commenting on the Group’s performance, the Group Chief Executive Officer, Mr. Peter Ashade, had this to say: “I am pleased to inform our stakeholders that despite the economic peculiarities associated with election years, we recorded positive growth across our top and bottom line earnings during the first quarter, amid elevated cost of doing business and volatile financial markets globally in addition to a heated political landscape among other uncertainties in our domestic economy.

“Our business diversification strategy which we have pursued concertedly since 2019, and prudent risk management practice is yielding desired results in line with our long-term vision, sustaining our earnings growth, protecting investors’ assets, and strengthening our business model to withstand macroeconomic shocks in the harsh operating environment which continues to present a challenge for policymakers globally.

“Our business outlook and projections for the year remains positive and we are laserfocused on creating new business opportunities, improving our value propositions to meet our clients’ needs, and capturing optimal economic value to deliver decent returns to shareholders.”

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

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NNPC E&P Ltd and NOSL Begin Oil Production at OML 13, Akwa Ibom State

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NNPC Exploration and Production Limited (NNPC E&P Ltd) and Natural Oilfield Services Limited (NOSL) have commenced oil production at Oil Mining Lease 13 (OML 13) located in Akwa Ibom State.

The announcement came through a statement signed by Olufemi Soneye, the spokesperson of NNPC E&P Ltd, highlighting the collaborative effort between the flagship upstream subsidiary of the Nigerian National Petroleum Corporation (NNPC) and NOSL, a subsidiary of Sterling Oil Exploration & Energy Production Company Limited.

The production, which officially began on May 6, 2024, saw an initial output of 6,000 barrels of oil. The partners aim to ramp up production to 40,000 barrels per day by May 27, 2024, reflecting their commitment to enhancing Nigeria’s crude oil production capacity.

Soneye said the first oil flow from OML 13 shows the dedication of NNPC E&P Ltd and NOSL to drive growth and development in Nigeria’s oil and gas sector.

He stated, “The achievement does not only signify the culmination of rigorous planning and execution by the teams involved but also represents a new era of economic empowerment and development opportunities for the host communities.”

For Nigeria, the commencement of oil production at OML 13 holds immense significance. It contributes to the country’s efforts to increase its oil production capacity, essential for meeting domestic energy needs and driving economic growth.

Moreover, Soneye reiterated NNPC E&P Ltd and NOSL’s commitment to operating in a safe, environmentally responsible, and community-beneficial manner.

This partnership underscores their dedication to sustainable practices and fostering positive impacts in the local communities where they operate.

The commencement of oil production at OML 13 marks a pivotal moment in Nigeria’s oil and gas industry, signifying not only increased production capacity but also the collaborative efforts between industry players to drive growth and development in the nation’s vital energy sector.

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Manufacturers Grapple with Losses Amid Economic Strain

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In the first three months of 2024, some of Nigeria’s major manufacturers found themselves navigating treacherous waters as financial losses mounted amidst economic turbulence.

According to data compiled by BusinessDay, rising interest rates and a further devaluation of the naira contributed to the woes of these industrial giants.

The latest financial reports from 13 listed consumer goods firms paint a grim picture, with seven of them collectively recording a staggering loss of N388.6 billion in Q1.

Names such as International Breweries Plc, Cadbury Nigeria Plc, and Nigerian Breweries Plc were among those that bore the brunt of the downturn.

On the flip side, a few companies managed to buck the trend. BUA Foods Plc, Unilever Nigeria Plc, and Dangote Cement Plc reported a combined profit of N171.9 billion, showcasing resilience amidst the challenging economic landscape.

While the overall revenue of these manufacturers saw an impressive 79 percent increase to N2.27 trillion, it was overshadowed by soaring financing costs.

In Q1 alone, finance costs skyrocketed to N616.5 billion from N65.8 billion in the same period in 2023.

Analysts attribute these mounting losses to the confluence of factors, including the devaluation of the naira and escalating interest rates. With the naira experiencing nearly a 30 percent devaluation this year alone, coupled with a 40 percent devaluation last June, companies faced intensified pressure on their margins.

Moreover, the Central Bank of Nigeria’s decision to raise the monetary policy rate to 24.75 percent in March further exacerbated the situation.

This marked the second consecutive increase, following a 400 basis points hike in February, aimed at curbing inflation.

The adverse effects of these economic headwinds were felt across various sectors. Nestle reported the highest finance cost of N218.8 billion, followed closely by Dangote Cement and Dangote Sugar Refinery.

Commenting on the challenging business environment, Uaboi Agbebaku, the company secretary at Nigerian Breweries, highlighted how increased interest rates and FX volatility led to a staggering 391 percent rise in net losses compared to the same quarter in 2023.

Looking ahead, manufacturers remain cautiously optimistic but vigilant. Thabo Mabe, managing director at NASCON, emphasized the importance of navigating the turbulent waters while executing robust strategies to ensure sustained growth.

As Nigeria grapples with economic uncertainties, the resilience of its manufacturing sector will play a pivotal role in shaping the nation’s economic trajectory.

However, concerted efforts from both the public and private sectors will be needed to steer the industry towards stability and growth.

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Shell Nigeria’s $1.09 Billion Tax and Royalty Payments Power Economic Growth

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Shell

Shell Petroleum Development Company of Nigeria Limited (SPDC) and Shell Nigeria Exploration and Production Company Limited (SNEPCo) paid a sum of $1.09 billion in corporate taxes and royalties to the Nigerian government in 2023.

This figure, revealed in the recently published 2023 Shell Briefing Notes, shows Shell’s commitment to supporting Nigeria’s development through substantial financial contributions.

According to the briefing notes, SPDC disbursed $442 million in taxes and royalties, while SNEPCo remitted $649 million.

Despite a decrease from the $1.36 billion paid in 2022, these payments highlight Shell’s continued role as a key contributor to Nigeria’s revenue generation efforts.

Osagie Okunbor, Managing Director and Country Chair of Shell Companies in Nigeria said “Shell companies in Nigeria will continue to contribute to the country’s economic growth through the revenue we generate and the employment opportunities we create by supporting the development of local businesses.”

The briefing notes also provided insights into Shell’s ongoing operations and initiatives in Nigeria. The company’s investments span more than six decades, with a focus on powering progress and promoting socio-economic development.

Through collaborations with stakeholders and communities, Shell aims to provide cost-effective and cleaner energy solutions while fostering sustainable growth.

“It is important to emphasize that Shell is not leaving Nigeria and will remain a major partner of the country’s energy sector through its deep-water and integrated gas businesses,” Okunbor reiterated, underscoring Shell’s long-term commitment to Nigeria’s energy landscape.

Shell’s contributions extend beyond financial payments, encompassing initiatives aimed at enhancing local capacity building, fostering job creation, and promoting social development. By prioritizing safe operations and environmental stewardship, Shell seeks to align its business objectives with Nigeria’s sustainable development goals.

As Nigeria navigates economic challenges and seeks avenues for growth, Shell’s substantial tax and royalty payments serve as a testament to the company’s enduring partnership with the Nigerian government and its commitment to driving economic progress.

Through continued collaboration and investment, Shell endeavors to play a pivotal role in Nigeria’s journey towards prosperity and sustainability.

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