- Investors Lose N546.2b in First Half
Investors in Nigerian equities suffered average depreciation of 4.66 per cent in their portfolios during the first half of this year. This is equal to a net loss of N546.2 billion during the six-month period.
This extended the losing streak at the market over the past 18 months to a net loss of N3 trillion or an average decline of 22.5 per cent.
Benchmark index showed that Nigerian equities traded mostly negative during the period, declining in four of the six months. The market also closed both the first and second quarters on the downside.
The All Share Index (ASI) – the main value-based index that tracks share prices at the Nigerian Stock Exchange (NSE) – closed June 2019 at 29,966.87 points – indicating an average decline of 3.55 per cent, 3.46 per cent and 4.66 per cent for June, the second quarter and half-year.
The ASI had opened 2019 at 31,430.50 points, 17.81 per cent down from its 2018’s opening index of 38,243.19 points. It had, however, rallied a world-leading gain of 42.30 per cent in 2017.
Most analysts remained cautious of the outlook for the equities market in the immediate period, although most investment pundits agreed attractive valuations, steady corporate earnings and stable macroeconomic situation hold significant medium to long-term values for Nigerian equities.
“Our outlook for equities in the short to medium term remains conservative, amidst the absence of a positive catalyst,” Cordros Capital stated at the weekend.
Ibadan Zone Shareholders Association (IBZA) Chairman Eric Akinduro, blamed political tension and related slowdown and macroeconomic uncertainties for the performance of the market in the first half. Nigeria had its general elections in the first quarter, during which President Muhammadu Buhari was re-elected. However, the main opposition candidate and former vice president, Alhaji Atiku Abubakar of the Peoples Democratic Party (PDP) is still challenging the election results at the tribunal.
According to him, the first half performance was far below expectations mainly due to pre- and post- election tensions.
“The economy was full of uncertainties, the political climate was volatile, insecurity and unrest and many more challenges contributed to the poor performance. Companies were not sure of what government policy would be, there was no definite business-oriented policies that could have helped the market,” Akinduro said.
He said the negative trend might continue for awhile because the economy has not shown any serious positive sign.
While commending the government for the success of its foreign exchange management, Akinduro said it needs to do more to create enabling environment for companies to operate and deliver better results, which could stimulate the market.
The unabsorbed impact of the listing of Nigeria’s largest telecoms company, MTN Nigeria Communications Plc, in May 2019 however, coloured the market capitalisation with a resemblance of gain.
The NSE listed 20.35 billion ordinary shares of MTN Nigeria at N90 per share, representing initial listing value of N1.83 trillion. The new listing and subsequent rally rallied the market capitalisation to a gain of N2.726 trillion in May 2019, one of the two months that ended positive. The other positive month was in February.
With the MTN effect, aggregate market value of all quoted companies on the NSE closed first half at N13.206 trillion, implying a gain of N1.49 trillion during the first half. Market capitalisation of equities had opened 2019 at N11.721 trillion. It had opened 2018 at N13.609 trillion.
Based on market values, the ASI and market capitalisation are correlated indices and without new listing or delisting, usually move simultaneously in the same direction. But the ASI is weighted, and as such adjusted for the new listing while the market capitalisation is a straight-line summation of share prices and issued shares. Thus, where the ASI and market capitalisation differ, the ASI is widely regarded as the true representation of the market condition.
The market started the year with a loss in January, rallied to appreciable recovery in February and relapsed into negative again in March. It continued on the bearish side in April before the MTN Nigeria’s listing provided a breather in May and then relapsed again in June.
Nigerian equities lost N326 billion in January, with average decline of 1.82 per cent. The ASI and market value of equities had closed January at 30,557.20 and N11.395 trillion. In February, investors in Nigerian equities netted N433 billion in capital gains as the stock market staged a major recovery. Average return for the month stood at 3.80 per cent. The ASI and market value of quoted equities had closed February higher at 31,718.70 points and N11.828 trillion. The market rounded off the first quarter with a net loss of N156 billion and average decline of 2.135 per cent in March 2019.
The market suffered a major contraction in April as the bearishness defied earnings reports and dividend recommendations. Quoted equities lost N714 billion in April. The ASI dropped from April’s opening index of 31,041.42 points to close the month at 29,159.74 points, representing average month-on-month decline of 6.06 per cent. Aggregate market value of all quoted equities also dropped from the month’s opening value of N11.672 trillion to close at N10.958 trillion.
In May, aggregate market value of all quoted companies at the NSE closed at N13.685 trillion, N2.726 trillion above the opening value of N10.959 trillion for the month. The gains of N2.726 trillion included entry listing value of N1.83 trillion added by the listing of MTN Nigeria. The May rally moderated the negative average year-to-date return, which had opened the month at -7.22 per cent, to -1.15 per cent for the five-month period.
Flour Mills Posts Strong Half Year Results Despite Headwinds
Flour Mills of Nigeria Plc recorded strong performance in the Half Year (H1) ended September 30, 2020.
In the 2020/21 half-year results released on Tuesday through the Nigerian Stock Exchange, the leading integrated food business and agro-allied Group, grew revenue by 31 percent year-on-year from N270.8 billion posted in the half-year of 2019/20 to N355.1 billion in the period under review with second-quarter growth of 47 percent when compared to last year second quarter.
Similarly, the Group’s profit before tax grew by 60 percent year-on-year from N8.6 billion in H1 2019/20 to N14.6 billion in H1 2020/21 with an impressive 160 percent growth from the second quarter.
The strong performance continues across the board as profit before tax was driven by the agro-allied segment, which realised a profit of N6.3 billion when compared to the loss posted in 2019/20 period. The company said it recorded strong improvement in edible oils and fats, protein and fertiliser businesses after its investments over the years started yielding results.
Profit after tax grew by 68 percent from N5.9 billion achieved in H1 2019/20 to N9.9 billion in the period under review.
According to the company, despite economic uncertainties and headwinds, the Group has continued to show sustained growth in key areas with the agro-allied unit leading with a strong result in edible oils and proteins.
Speaking on the performance, Paul Gbededo, the Managing Director and Chief Executive Officer (CEO) of the company, said “with this result, our business has once again shown its resilience, by following the path of sustainable growth despite the prevailing challenges in both the local and global economy.”
He further stated that “in line with our vision to continue to grow value for our investors, Management will for the remaining part of the financial year continue to concentrate on improving operational effectiveness through accelerated strategies for Group-wide cost optimisation, which will ensure sustainability in the current market climate, while we will continue to invest in growing the business further.”
US Banks Led the Most Fined Financial Institutions in 2020
US Banks Are The Most Penalised Financial Institutions in 2020 Financial Year
Banks in the United States were the most fined financial institutions in 2020, according to the latest report from Finbold.
Finbold, a company that specialises in financial data, said three countries accounted for 97.32 percent of the total fines levied on banks in 2020.
The data revealed that United States banks are the most fined at €9.15 billion. This was followed by Australian banks with a combined €770 million, while banks in Israel came third with €762.97 million.
Also, while the fines are likely to increase before the end of the year, the total fines levied against financial institutions globally stood at €11.61 billion as of October 22nd.
Further breakdown showed Swedish banks came fourth with €456.18 million fines while German banks that incurred a combined €169.01 million fines came fifth.
The report showed Goldman Sachs led the most fined bank with €5.26 billion for various violations of regulatory rules.
Wells Fargo came second with €2.53 billion while Westpac Bank in Australia and Hapoalim emerged third and fourth with €770 million and €762.97 million, respectively.
Other heavily fined lenders include Swedbank from Sweden fined €360 million and Germany’s Deutsche with €126.52 million fine in 2020 so far.
Speaking on banks’ fines, Oliver Scott, Chief Editor, Finbold, said “Notably, the tally of bank fines is likely to increase in the coming years as European and Asian regulators catch up with U.S peers who are considered more aggressive. However, banks are looking for means of minimizing fines. Analysts have been of the opinion that the fines could have been avoided if banks leverage technology through the deployment of perfect software.”
Guinness Nigeria Explains Reason for N12.6 Billion Loss in 2020
Guinness Nigeria Speaks on 2020 Poor Performance
Guinness Nigeria Plc has blamed the challenging business environment amid COVID-19 restrictions that led to the closure of bars, clubs, lounges and restaurants for its 2020 losses.
Mr. Baker Magunda, Managing Director/CEO, Guinness Nigeria, who spoke on the company’s performance in 2020, said the aforementioned represents a major part of the company’s consumption, adding that restriction imposed on gathering impacted the usual demands for celebratory occasions.
He explained that demand was weighed upon by a decline in consumer income, rising unemployment rate due to the shutdown of large corporations, surged in VAT and excise throughout 2020.
According to him, distribution was affected by the ban imposed on inter-state travel despite collaborating with regulatory authorities to minimize the negative impact on the company.
Here is a breakdown of the Guinness Nigeria performance in 2020 Financial Year
Guinness profit plunged by a massive 129.1 percent to -N12.6 billion in the 2020 Financial Year (FY), down from the N5.5 billion profit achieved in 2019 (FY). While the company’s gross profit nosedive by 16.9 percent from N40.13 billion posted in 2019 to N33.33 billion in 2020.
The company decline was broad-based as revenue also declined from N131.5 billion filed in 2019 to N104.4 billion in the 2020 financial year.
Accordingly, administrative cost rose from N9.9 billion in the 2019 financial year to N14.3 billion in 2020. However, the cost of sales moderated by 22 percent from N91.4 billion posted in 2019 to N71.1 billion in 2020.
Finance cost expanded from N2.6 billion in 2019 to N4.5billion in 2020 while finance income declined to N301 million in the year under review, down from N750.9 million in 2019.
Mr. Baker Magunda, said “The last quarter performance of fiscal 2020 was significantly impacted by restrictions due to COVID-19, exacerbating the already challenging economic environment. Closures of on-trade premises (bars, lounges, clubs, and dine-in restaurants), which represents the major part of the consumption occasion for our products and bans on celebratory occasions, impacted sales.
“Demand was also impacted by reduced consumer income, unemployment concerns due to the shutdown of a large number of businesses, and increases of VAT and excise throughout the year.”
Speaking further Magunda said, “Distribution was impacted by the ban of inter-state, and in some cases intra-state travel. Although, Management worked diligently with regulatory authorities to minimize the impact, this hampered our distributors’ ability to restock and have our brands available for purchase.”
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