The nine-month (9M) results for 2024 shows that 10 out of 13 listed companies in the Nigerian Exchange Limited recorded an 80 percent increase in their revenue year-on-year due to the rising demand for their products, better cost management and high prices.
Nigeria is battling a series of economic constraints, including sustained inflationary pressures, currency devaluation, and mounting operating costs for domestic businesses.
Amid government efforts to stabilise the naira and control inflation, Africa’s fourth largest economy saw its consumer price index rise to 32.70 percent in September on petrol price hike, marking a sharp reversal from the two-month decline witnessed earlier, thereby denting consumer purchasing power.
Recently the Central Bank of Nigeria (CBN) raised its Monetary Policy Rate (MPR) by 50 basis points, bringing the benchmark interest rate to 27.25 percent in September from 26.75 percent in July 2024. This marked the fifth consecutive rate hike this year.
Amid these headwinds, companies like United Capital Plc, Unilever Nigeria Plc, Champion Breweries Plc, United Bank of Africa (UBA) Transcorp Hotels, Transcorp Power Plc, Ikeja Hotel Plc, Stanbic IBTC Holding Plc, Dangote Cement Plc and Geregu Power Plc were able to turn in profits after all expenses has been deducted.
BusinessDay’s analysis of the firm’s financial statements shows that its combined after-tax profit rose to N1.1 trillion in nine months, a 79.9 percent increase from N884 billion in the same period of 2023.
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UBA reported the highest profit of N525.3 billion, followed by Dangote Cement with N279.1 billion from N277.5 billion, Stanbic IBTC Holding with N182.8 billion from N109.2 billion, Transcorp Power with N58.4 billion, Geregu Power with N24.1 billion, United Capital with N15.9 billion, Unilever with N11 billion, Transcorp hotels with N10.2 billion, Ikeja Hotel N2 million and Champion Brewery with N21 million from a loss of N77 million.
However, UPDC Plc, Japaul Gold and Ventures Plc reported decline in profits amounting to N396 million and N578 million while Nigerian Breweries posted a loss of N149 billion from N57.1 billion.
Israel Odubola, a research analyst, said the rise in the listed companies’ profit is a result of mixed factors ranging from higher pricing, higher production volume, better cost management, among others.
According to him, “Banks typically have robust net foreign currency assets, which is positive for bottom-line, and for a long time have shown resilience despite economic challenges.
“The cement sector is an oligopolistic industry. I am sure profitability will either stem from higher pricing and/or higher production volume. However, other firms in different sectors’ increase in earnings can be attributed to strategies put in place to minimises operating costs.”
In September, business activities across three key sectors -Industry, Services, and Agriculture—stood at 50.5 points, indicating the second consecutive month of economic expansion, according to the CBN PMI survey. It added that this follows 13 months of contraction, which persisted until July 2024.
Firm-by-firm analysis:
UBA
UBA’s profit after tax amounted to N525.3 billion, representing 16.9 percent of N449.3 billion profits when taken as a unit. The bank’s profit before tax amounted to N603.4 billion, an increase of 20.1 percent compared to the N502.1 billion.
During the period, its basic and diluted earnings per share stood at N14.78 per share from N12.93 per share in the comparable periods.
UBA recorded cash and cash equivalents of N5.85 trillion, up from N1.98 trillion. It is a leading pan-African financial institution, offering banking services to over 37 million customers across 1,000 business offices and customer touch points in 20 African countries.
With a presence in New York, London, Paris and now the UAE, UBA is connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross-border payments and remittances, trade finance, and ancillary banking services.
Dangote Cement
The after-tax profit of Dangote Cement, Africa’s largest cement maker firm, rose to N279.1 billion from N277.5 billion in the corresponding period of 2023. The company’s revenue rose to N2.5 trillion from N1.5 trillion aided by high pricing.
During the reviewed periods, its finance income rose to N29 billion from N20 billion and its finance cost rose to N451 billion from N190 billion. The firm’s earnings per share rose to N16.55 from N16.08.
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Stanbic IBTC
Stanbic IBTC reported N182.8 billion profit after tax, up from N109.2 billion in the same period of 2023. The holding company basic and diluted earnings per share stood at N1,390 per share from N825 per share in the comparable period of 2023.
Its cash and cash equivalents amounted to N1.9 trillion, up from N837 billion.This is an integral entity within the financial landscape of Nigeria, and operates under a robust structure with a primary function as a financial holding company.
Geregu Power
Geregu Power’s after-tax profit rose to N24.1 billion from N11.3 billion in the corresponding period of 2023. The company’s revenue rose to N112.5 billion from N55.7 billion aided by energy sales.
During the reviewed periods, its finance income rose to N6.5 billion from N6.08 billion in 2023 and its finance cost fell to N7.3 billion from N8.4 billion. The firm’s earnings per share rose to N9.68 from N4.54.
United Capital
The after-tax profit of United Capital Plc, an investment company, increased to N15.9 billion from N8.4 billion during the period. The firm’s gross earnings rose by 60.5 percent to N28.1 billion from N17.5 billion in the same period of 2023. Trading income rose by 161 percent to N3.4 billion.
During the reviewed period its operating income rose to N22.3 billion from N16 billion while operating expenses surged by 60.4 percent to N7.7 billion.
Unilever Nigeria
Unilever Nigeria, a fast-moving consumer goods firm’s after-tax profit rose to N11 billion from N7.5 billion during the reviewed period.
The company’s revenue rose to N103.8 billion from N71.2 billion. During the reviewed periods, its finance income rose to N6.7 billion from N5.3 billion and its finance cost also rose to N2.9 billion from N2.5 billion. The firm’s earnings per share rose to N1.92 kobo from N1.30 kobo.
Tim Kleinebenne, managing director, Unilever, said: “The consistency in our quarter-on-quarter sustained growth and performance remains a testament that with our Growth Action Plan (GAP), we are committed to serving consumers with our best brands to meet their daily needs of improved health and hygiene. Unilever Nigeria is pleased with its performance progress riding on the pillars of operational efficiency, cost optimization, purposeful brands, and increasing market share across key categories.”
Transcorp Power
Transcorp Power, a power generating company in Nigeria, has reported an after-tax profit of N58 billion from N20.4 billion in 2023. Its revenue surged to N223.5 billion from N88.4 billion during the surveyed periods.
The company’s finance cost increased to N7.9 billion in 9M from N5.9 million in the same period of 2023 while income tax rose to N22.7 billion from N7.9 billion. Earnings per share fell to N7.79 from N258 in the same period of 2023.
Ikeja Hotel
The after-tax profit of Ikeja Hotel, a hotel development and management company, increased to N2 million from N587,353 during the periods. The firm’s cost of sales rose to N7.8 million claiming 60 percent of the company revenue.
The company’s finance cost increased to N878,831 in nine months to September 2024, while income tax rose to N1.08 million from N482,652. Earnings per share rose to N93 from N28 in the same period of 2023.
Transcorp Hotel
The after-tax profit of Transcorp Hotel, a hospitality company, increased to N10.2 billion from N4.1 billion during the periods. The firm’s cost of sales rose to N14 billion claiming 28 percent of the company’s revenue.
The company’s finance cost fell to N2.9 in 9M from N2.95 billion while income tax rose to N6.1 billion from N1.4 billion. Earnings per share rose to N100 from N40 in the same period of 2023.
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