• Monday, May 20, 2024
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Nigerian firms’ Q2 earnings mirror recovery from coronavirus

Service-Sector led structural change and the Nigerian economy

Combined after-tax profits of listed companies in the oil and gas, cement, fast-moving consumer goods and palm oil sectors jumped by 47.02 percent in the first six months of 2021 compared with previous year, when COVID-19 almost muted their earnings.

With the full re-opening of the Nigerian economy following the ease in lockdown restrictions, the country’s biggest companies leveraged a combination of factors including strong unit volume growth, pricing and favourable base effects to post bumper results in the first six months of 2021.

The performance of the 65 percent of the listed companies that have released their financials mirrors the recovery rate of the Nigerian economy. The economy slipped into a second recession in five years in the third quarter of 2020 after it recorded a decline of 3.6 percent, but exited in the following quarter with a 0.11 percent GDP growth.

Analysis of the half-year 2021 performance under review shows that their profits hit N346.4 billion, N110.79 billion more than the N235.61 billion reported in the corresponding period of 2020.

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“The results show robust sales and after-tax earnings growth of 60% year-on-year on average across our coverage universe,” Gregory Kronsten, head, macroeconomic and fixed income research at FBNQuest Research, says.

According to a report by the asset management arm of FBN Holdings, on average, the non-financials reported a positive revenue surprise of about 15 percent relative to its expectation.

A dive into the listed companies’ financial results for the first half of 2021 reveals how individual sectors/companies performed.

Oil and gas

Listed oil and gas firms on the Nigerian Exchange Limited (NGX) reported growth in profit and revenue on the back of the hike in price of petrol following the rise in global crude prices.

Data by the National Bureau of Statistics (NBS) reveal that the average price of petrol was up by 28.49 percent to N165.61 per litre in June 2021 from N128.88 per litre in the corresponding month of 2020.

Some of the oil and gas companies that have released their half-year results for the period ended June 30, 2021, include Total Nigeria plc, MRS Nigeria plc, Conoil plc, Seplat Petroleum, Ardova plc and Eterna plc.

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Their profit for the period jumped from N379.8 million in H1 2020 to N11.39 billion in H1 2021. The companies also grew their revenue by 30 percent to N500.93 billion in the review period from N384.08 billion reported in the half-year ended June 30, 2020.


FMCGs companies saw their profits surge to a five-year high and above pre-pandemic levels in the first half of 2021, a sign that an economic recovery is on for Africa’s biggest economy.

Analysis of their results shows that Nestle Nigeria, Dangote Sugar, Flour Mills, Unilever Nigeria, and Nascon recorded a combined profit of N52 billion in the first half of 2021, a 22 percent increase compared with N42.6 billion recorded in the same period last year.

Before the pandemic, the profits of the firms dwindled since 2018 but made a rebound in 2021 on increased sales.

Ayorinde Akinloye, a consumer goods analyst at United Capital plc, explains that the reason most FMCGs recorded above pre-pandemic level profit is that many of them implemented price increases between last year and this year.

“They implemented at least two to three price increments across most of their products, which is why we have been seeing inflation rise significantly. That is what has driven the revenue and profits performance that we have seen so far in their transit to 2021,” Akinloye says.

Palm oil

Nigeria’s palm oil producers posted their highest profit in six years in the first half of 2021, as the industry continues to reap the gains of a boom in local demand.

Okomu Oil Palm Company and Presco plc, the largest players, collectively recorded a revenue increase of 67 percent year-on-year in the first half of 2021, reaching N45.09 billion from N26.98 billion in 2020.

The profit after tax of both surged by a combined 134 percent to N19.7 billion from N8.4 billion, as analysed from the companies’ financials.


Nigeria’s largest cement makers, Dangote Cement plc, BUA Cement plc and Lafarge Africa, reported a combined profit before tax increase of 61.90 percent in the first half of this year.

Analysis of the three companies’ unaudited financial statements shows they posted a combined pre-tax profit of N237.60 billion in H1 2021, up from N146.76 billion in H1 2020.

The impressive performance can be linked to the increase in the volume of sales as well as the increase in the price of cement following the full re-opening of construction activities amid government decision to relax COVID-19 restrictions.

Dangote Cement, for example, reported revenue of N690.55 billion in H1 2021, up 44.81 percent from N476.85 billion in the corresponding period of 2020.

The manufacturer grew its profit before tax by 102.30 percent year-on-year to N151.15 billion from N74.79 billion in the comparable period of 2020.

BUA Cement grew its profit before tax to an N49.70 billion, an increase of 24.27 percent when compared with the H1 of 2020. Its revenue increased by 22.73 percent from N101.26 billion in half-year of 2020 to N124.28 billion in H1 2021.

Lafarge Africa’s profit before tax increased by 27.29 percent year-on-year to N36.75 billion in H1 2021. Its revenue rose by 20.30 percent to N145.02 billion from N120.54 billion in H1 2020.


Analysts expect the robust sales and earnings growth of H1 to be sustained in the second half of the year on the back of the same factors that drove the bumper earnings in the first six months.

“Looking ahead, we expect the robust sales and earnings growth to be sustained into H2’21, on the back of related drivers including strong volume growth, favourable base effects and supportive price/volume mix,” research analysts at FBNQuest states.

According to them, across the non-financial sectors, they see an average potential upside of about 16 percent over the next 12 months.