Company News

Manufacturers Grapple with Losses Amid Economic Strain

Published

4 months ago

May 8, 2024

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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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Company News

Dangote Refinery Denies NNPC Petrol Lifting Claims Amid Ongoing Contract Talks

Published

2 days ago

September 5, 2024

Samed Olukoya

Dangote Refinery has refuted claims that the Nigerian National Petroleum Corporation (NNPC) had begun lifting petrol from the refinery and set the pump price at N897 per litre.

In the BusinessDay publication, the newspaper reported that NNPC commenced petrol lifting on Wednesday and set the pump price at N897/litre.

Anthony Chiejina, the Group Chief Branding and Communications Officer of Dangote Refinery clarified that NNPC has not yet begun lifting Premium Motor Spirit (PMS) from the refinery.

According to Chiejina, discussions between Dangote Refinery and NNPC on the contract for petrol lifting are still ongoing and have yet to be finalized.

Chiejina said since no petrol has been lifted, the claim of setting a price for the product is unfounded.

He further noted that the pricing of PMS falls under the jurisdiction of the government and is strictly regulated, meaning Dangote Refinery has no authority to set prices independently.

The company assured Nigerians that once operations begin, the refinery will deliver high-quality petroleum products across the country.

Chiejina urged the public to disregard the misleading headline and assured that accurate information will be provided as the refinery prepares to commence full operations.

The statement concluded by reiterating Dangote Refinery’s focus on contributing to Nigeria’s energy sector and meeting the nation’s demand for top-tier petroleum products.

Company News

Volvo to Launch Electric Truck With 600 km Range

Published

5 days ago

September 3, 2024

Samed Olukoya

Up to 600 km on one single charge. That’s how far Volvo’s next-generation heavy-duty electric truck will be able to drive. The longer range represents a breakthrough for long-distance transport with zero tailpipe emissions.

The electrification of heavy trucks is continuing across the world and longer distances are now becoming a possibility.

Next year Volvo will launch a new long-range version of its FH Electric that will be able to reach up to 600 km on one charge.

This will allow transport companies to operate electric trucks on interregional and long-distance routes and to drive a full working day without having to recharge. The new Volvo FH Electric will be released for sale during the second half of 2025.

“Our new electric flagship will be a great complement to our wide range of electric trucks and enable zero-exhaust emission transport also for the longer distances. It will be a great solution for transport companies with a high annual mileage on their trucks and with a strong commitment to reduce CO2,” says Roger Alm, President Volvo Trucks.

Five years of electric leadership

The enabler for the 600 km range is Volvo’s new driveline technology, the so-called e-axle, which creates space for significantly more battery capacity onboard. More efficient batteries, a further improved battery management system and overall efficiency of the powertrain also contribute to the extended range.

Volvo Trucks is a global leader in medium- and heavy-duty electric trucks with eight battery-electric models in their portfolio.

The wide product range makes it possible to electrify city and regional distribution, construction, waste management and, soon, long distance transport. Volvo has so far delivered more than 3,800 electric trucks to customers in 46 countries around the world.

“The transport sector represents seven percent of global carbon emissions. Battery-electric trucks are important tools to reduce the climate footprint. Besides the important environmental gains that electric trucks bring, they offer truck drivers a much better working environment, with much lower levels of noise and vibrations,” says Roger Alm.

Volvo Trucks drives the transition towards fossil-free transport to reach its net-zero emissions target by 2040 using a three-path technology strategy.

The three-path technology approach is built on battery electric, fuel cell electric and combustion engines that run on renewable fuels like green hydrogen, biogas or HVO (Hydrogenated Vegetable Oil).

Company News

Dangote Refinery Starts Gasoline Output Amid NNPC’s Struggles with $6 Billion Debt

Published

5 days ago

September 2, 2024

Samed Olukoya

Nigeria’s Dangote Refinery has begun processing gasoline after delays caused by recent crude shortages, an executive said on Monday.

The $20 billion refinery on the outskirts of Lagos, built by Nigerian billionaire Aliko Dangote, began operations in January with output of products including naphtha and jet fuel.

With a capacity of 650,000 barrels per day, Africa’s largest refinery promises to ease oil producer Nigeria’s costly reliance on imported oil products.

“We are testing the product (gasoline) and subsequently it will start flowing into the product tanks,” said Devakumar Edwin, a vice president at Dangote Industries Limited.

He did not say exactly when the gasoline would hit the local market.

Edwin said state-oil firm NNPC Ltd, Nigeria’s sole importer of gasoline, would buy its gasoline exclusively.

“If no one is buying it, we will export it as we have been exporting our aviation jet fuel and diesel,” Edwin said.

The delivery of gasoline into the Nigerian market will ease NNPC’s struggle to supply the local market.

The company is reeling with debts of $6 billion to oil traders for supply since January.

This has affected its ability to supply the local market where fuel queues have persisted since July.

Prices have jumped by 45% from the official price of 617 naira ($0.3942) announced after subsidies were removed last year.

“The news that Dangote is processing gasoline couldn’t come at a more crucial time given NNPC’s statement about its difficulties securing imported supply due to financial strain,” said Clementine Wallop, director, sub-Saharan Africa at political risk consultancy Horizon Engage.

She said this “prompts the question of how NNPC will manage purchasing from Dangote, and impresses the need for greater transparency in its finances”.

Nigeria is Africa’s top oil producer yet it imports almost all its fuel due to years of neglect of its national refineries.