Profits of bluechip companies at the Nigerian Stock Exchange (NSE) spiked in the fourth quarter of 2012,helping to boost full year profits and signaling that the nation’s economic expansion is gaining steam after an 85 basis points dip in 2012.
Net income for five bluechip companies, Dangote Cement, Nigerian Breweries, Nestle, Julius Berger and Dangote Sugar, representing leaders in their sectors, increased 21.5 percent from a year earlier, to N227.7 billion, up from N187.26 billion, according to BusinessDay’s analysis of their earnings for full year 2012.
This is as economic activity accelerated after strikes and the partial fuel subsidy removal dampened output and consumption in the early periods of 2012.
“Current trading is strong. We estimate that demand for cement in Nigeria increased by almost 16 percent in the first quarter of 2013,” Chief Executive Officer, Devakumar Edwin said in a statement released last week.
“I am pleased to report that our volumes rose by substantially more than the market’s growth rate.”
The Nigerian economy grew by 6.58 percent in 2012 lower than the 7.43 percent recorded in 2011, according to data from the National Bureau of Statistics (NBS).
The economy will probably expand 6.8 percent this year, the NBS said in February.
In the past year, the “non-oil sector was affected by the incidence of flooding, as well as muted consumer demand for the most part of the year” in industries including wholesale
and retail and telecommunications, the NBS said then.
The five industrial companies’ revenue rose 18.1 percent in 2012, to N976.3 billion ($6.1 billion), equivalent to 2.24 percent of Nigeria’s full year 2012 GDP of $272 billion.
Profit margins ranged from as high as 60 percent in Dangote Cement, to 4.4 percent at Julius Berger.
On an individual basis, Nestle Nigeria, a producer of consumer goods, reported a 21 percent rise in 2012 net income, according to a February 20 statement to the Nigerian Stock Exchange (NSE).
Dangote Cement domestic production of cement was up 50 percent in 2012, to 10.2 million tons, on the back of 11 million metric tons of new capacity added in 2012.
Sales for Nigerian Breweries rose 20 percent, to N252.7 billion, in 2012 after it acquired Sona Systems Associates Business Management Ltd. and Life Breweries Co. in 2011 to expand its capacity and add brands that include local beers Star and Gulder.
Industrial growth is rising amid rising domestic demand, disposable income and increased government spending on infrastructure and capital projects.
Nigeria’s capital budget rose by 17.8 percent in 2012, to N1.32 trillion from N1.12 trillion in 2011.
Income per head is expected to hit $1,731 in 2013, up 7.1 percent from the 2011 level of $1,615, according to data from investment bank, Renaissance Capital.
