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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.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Top Five US Oil and Gas Firms Lost $307bn in Market Value Amid COVID-19 Crisis

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Crude oil

Market Value of US Five Largest Companies Decline by $307bn in 2020

Even before the coronavirus pandemic, the oil and gas industry was faced with slumping prices. However, with a record collapse in oil demand amid the coronavirus lockdown, the COVID-19 crisis has further shaken the market, causing massive revenue and market cap drops for even the largest oil and gas companies.

According to data presented by StockApps.com, the top five oil and gas companies in the United States lost over $307bn in market capitalization year-over-year, a 45% plunge amid the COVID-19 crisis.

Market Cap Still Below March Levels

Global macroeconomic concerns such as the US-China trade war and the oil overproduction set significant price drops even before the coronavirus outbreak. A standoff between Russia and Saudi Arabia in the first months of 2020 sent prices even lower.

After global oil demand plunged in March, Saudi Arabia proposed a cut in oil production, but Russia refused to cooperate. Saudi Arabia responded by increasing production and cutting prices. Shortly Russia followed by doing the same, causing an over 60% drop in crude oil prices at the beginning of 2020. Although OPEC and Russia agreed to cut oil production levels to stabilize prices a few weeks later, the COVID-19 crisis already hit. Statistics show that oil prices dropped over 40% since the beginning of 2020 and are hovering around $40 a barrel.

Such a sharp fall in oil price triggered a growing wave of oil and gas bankruptcies in the United States and caused a substantial financial hit to the largest gas producers.

In September 2019, the combined market capitalization of the five largest oil and gas producers in the United States amounted to $674.2bn, revealed the Yahoo Finance data. After the Black Monday crash in March, this figure plunged by 45% to $373bn. The following months brought a slight recovery, with the combined market capitalization of the top five US gas producers rising to over $461bn in June.

However, the fourth quarter of the year witnessed a negative trend, with the combined value of their shares falling to $367bn at the beginning of this week, $6.2bn below March levels.

Exon Mobil`s Market Cap Halved in 2020, Almost $155bn Lost YoY

In August, Exxon Mobil Corporation, once the largest publicly traded company globally, was dropped from the Dow Jones industrial average after 92 years. As the largest oil and gas producer in the United States, the company has suffered the most significant market cap drop in 2020.

Statistics indicate the combined value of Exxon Mobil`s shares plunged by 52% year-over-year, falling from almost $300bn in September 2019 to $144bn at the beginning of this week.

Phillips 66, the fourth largest gas producer in the United States by market capitalization, witnessed the second-largest drop in 2020. Statistics show the company`s market cap dipped by 49.6% year-over-year, landing at $22.9bn this week.

The Yahoo Finance data revealed that EOG Resources lost over $21bn in market cap since September 2019, the third-largest drop among the top five US gas producers.

Conoco Phillips witnessed a 42% drop in market capitalization amid the COVID-19 crisis, with the combined value of shares plunging by almost $30bn year-over-year.

Statistics show Chevron witnessed the smallest market cap drop among the top five companies. At the beginning of this week, the combined value of shares of the second-largest US gas producer stood at $141.5bn, a 36.9% plunge year-over-year.

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Gold Hit 26.8% ROI YTD, the Highest Increase in Value Among Top Assets

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Gold Bars

Gold Delivers 26.8% Return on Investment Year-t-Date

As the world’s earliest form of currency, gold has long been considered a reliable store of value. Unlike banknotes, stock, or other assets, the precious metal managed to preserve the investors’ wealth throughout the years, especially in times of turmoil in the financial markets.

According to data presented by AksjeBloggen, gold hit a 26.8% YTD return on investment, the highest increase in value among top assets.

Gold Return Rate 8.5% Higher than in 2019

Investors tend to focus on gold in times of market volatility, considering it to be a ‘safe haven’ in crises like the coronavirus. In 2019, the value of gold increased by 18.3%, revealed the Blackrock data. The precious metal continued the impressive performance in 2020 with a 26.8% YTD return, 8.5% more than in 2019.

Statistics show that last year, the S&P 500 index increased in value by 31% but was outperformed by Nasdaq, which grew by 35.2%. The MSCI Europe index rose by 26.1% in 2019. China A-shares followed with a 22.3% ROI.

However, the COVID-19 crisis had a massive impact on popular assets, causing a sharp fall in their values during the first half of 2020. The Blackrock data revealed the Nasdaq YTD return hit 23.9%, 11.3% below the 2019 performance. China A stocks reached 10% ROI YTD, much under the 22.3% return in 2019.

Statistics show the S&P 500 index had an 8.4% value increase in the nine months of 2020, almost four times less than in 2019. MSCI Emerging Market Index reached a 4.9% value increase in the same period, compared to 13% in 2019.

The Blackrock data show that crude oil, FTSE 100, and MSCI Europe index witnessed the most significant drop in the nine months of 2020, with their values falling by 34.6%, 22.4%, and 11.5%, respectively.

Global Demand for Investment Gold Surged by 100% YoY

Although many investors value gold as an important portfolio asset, the economic downturn caused by the COVID-19 pandemic led to a surge in global demand for the precious metal.

The World Gold Council data showed the global demand for investment gold increased significantly since the beginning of the year.

In the fourth quarter of 2019, it amounted to 279.2 metric tons. By the end of March, this figure jumped by more than 93% to 539.6 metric tons. The increasing trend continued in the second quarter of the year, with global demand for investment gold hitting 582.9 metric tons, an almost 100% jump year-over-year.

Statistics indicate the global demand for gold for investment purposes hit a record-breaking 1,152 metric tons in the first half of 2020, the highest figure so far.

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Oil Prices News: Oil Gains Following Drops in US Crude Inventories

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markets energies crude oil

Oil Prices Gain Following Drops in US Crude Inventories and OPEC High Compliance Level

Global oil prices extended their 2 percent gains on Thursday after data showed U.S crude oil inventories declined last week.

The price of Brent crude oil, against which Nigerian oil is measured, gained 0.2 percent or 7 cents to $43.39 a barrel as at 12:10 pm Nigerian time. While the U.S. West Texas Intermediate (WTI) crude appreciated by 8 cent or 0.2 percent to $41.12 barrels.

Oil prices extended their three days gain after the American Petroleum Institute said the U.S crude inventories declined by 5.4 million barrels in the week ended October 9.

The report released after the market closed on Wednesday revealed that distillate stockpiles, which include diesel and heating oil, declined by 3.9 million barrels. Those stated drawdowns almost double analysts’ projections for the week.

Much of the fall is due to the effects of Hurricane Delta shuttering U.S. production in the Gulf of Mexico, and as such, will be a transitory effect,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

“Therefore, I am not getting too excited that a turn of direction is upon markets, although both contracts are approaching important technical resistance regions.”

Also, the report that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, referred to as OPEC+ attained 102 percent compliance level with their oil production cuts agreements bolstered global oil outlook. Suggesting that demands for the commodity are likely not growing and could drag down prices in few weeks, especially when one factor in the reopening of Libya’s Sharara oil field, workers returning to operation in Norway and the Gulf of Mexico.

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