Coronavirus batters oil price, equities, as investors run for cover
The outbreak of the coronavirus which has plunged oil price to its lowest in the year is expected to still weigh on investors’ sentiment this week as the Nigerian government has reported over a hundred contacts to the country’s first case, a 44-year-old Italian man who flew into Lagos from Milan Feb. 25 and was not quarantined until after 48 hours.
Following the spread of the deadly coronavirus to Lagos, Nigeria’s commercial hub and biggest city, investors went risk-off and financial markets slumped, Friday, as the equities and bond markets witnessed record sell-offs.
Analysts expect the outlook for the market would depend on how resilient the oil market would prove to be and the national response in controlling the virus outbreak.
Thirteen banking stocks declined on Friday while one remained flat, pushing the sector’s index lower by 6.52 percent lower compared to 7.01 percent decline on January 15, 2016.
So far, there are over 83,000 confirmed cases with over 2,800 deaths. The World Health Organisation (WHO) has identified Nigeria as one of its top 13 priority countries because of the direct links and travel volume to and from China.
Since the onset of the virus outbreak early in the year, oil prices have slipped over 15 percent amid demand-side concerns, the USD has appreciated against G10 and emerging market currencies against a background of risk aversion, and gold has jumped to fresh seven-year highs.
MTN Nigeria maintains trillion revenue mark
Despite regulatory headwinds in the Nigerian market, MTN’s revenue for the period ended 31st December 2019 surged 12.57 percent to N1.16trillion in 2019 from N1.03 trillion in 2018.
Operating profit surged 48.54percent to N395.29 billion from N266.11 billion in 2018. Profit before tax surged 31.07 percent to N290.1 billion from N221.34 billion in 2018.
Profit After Tax ballooned 38.73percent at N202.11billion from N145.68billion in 2018.
The teleco-giant grew its subscriber base by 10.5% to 64.3million
UBA grows profit by most in four years
Tier-one lender United Bank for Africa (UBA) grew profit by the most since 2016 after turning the corner to record improvements in both income and non-interest income last year.
The bank made N89.09bn in profit in 2019, 13.33 percent more than it did in the year before and the fastest bottom-line growth since a 21.14 percent growth four years ago.
The expansion followed impressive growth in non-interest income by 21.3 percent to N124.42bn last year compared to a decline in 2018, while despite a challenging interest environment, UBA was able to deliver 7.9 percent growth in net interest income also coming from a decline last year.
Nestle grows profit by 6% to N45.68bn in 2019
The challenging operating environment in Nigeria’s slowly recovering economy was telling on Nestle after the FMCG giant’s profit growth slowed to 6.22 percent in 2019.
Profit rose to N45.68bn in 2019 compared to N43bn, the company said in its audited annual report published on the Nigerians Stock Exchange (NSE) March 1.
The slowdown in profit comes after-sales for the year grew 6.67 percent to N284.04bn. The food and beverage maker had grown Pre-and-post tax profit by 36.3 percent and 22.3 percent respectively in the first half of the year.
Despite the slowdown in growth, Nestle beat United Capital analysts’ forecasted sales growth of 5.0 percent growth in 2019.
Nestle’s beverage segment grew by 10 percent to N107.95bn while food segment grew 4.71 percent to N176bn.
The consumer goods giant noted a slowdown in its cost of sale as it continued to benefit from local sourcing most of its raw materials.
Cost of sales grew 2.32 percent compared to 6.33 percent in 2018 and a 5-year average of 14.46 percent.
As a result, Nestle last year was able to retain N45.12 from every N100 sales as gross margin compared to N42.78 in 2018.
NSE set for demutualization
Members of the Nigerian Stock Exchange (NSE) will tomorrow (Tuesday) through a voting process pass requisite resolutions to make the bourse the 57th exchange to demutualise amongst the 70 members of the World Federation of Exchanges (WEF) as at June 27, 2019.
A convened mandatory Court-ordered Meeting (COM) of the Exchange’s members as well as an Extraordinary General Meeting (EGM) holds in Lagos tomorrow, March 3, 2020, where members will respectively pass requisite resolutions for demutualisation of the Exchange and also pass the resolutions for the appointment of inaugural board members of Nigerian Exchange Group plc.
The “Demutualisation of the Nigerian Stock Exchange Act 2018” at the National Assembly facilitates the conversion and re-registration of the NSE from a company limited by guarantee to a public company limited by shares in order to adopt and efficiently implement the global practice of demutualisation of stock exchanges.
A demutualised exchange comes with benefits and opportunities to its members and other stakeholders. It changes the structure of the current owners; makes dealing member firms become shareholders; and brings in a new era of corporate governance on the exchange. The financial advisers are Chapel Hill Denham Advisory Limited and Rand Merchant Bank Nigeria Limited.
