No fewer than 81 firms quoted on the floor of the Nigerian Stock Exchange have reported profit before tax of N572.83billion at the end of the first half of 2017, against N315.8 billion that was recorded in the comparative period of 2016.
Similarly, the companies also recorded a cumulative turnover of N2.59 trillion, a 20 per cent increase when compared to the N2.16 trillion reported in H1 of previous year. The figure out-performed average inflation rate of 17.4 per cent during the review period.
However, the financial position of the companies confirmed a consensus position from various quarters that Nigeria economy would soon exit recession in the second quarter of 2017.
Meanwhile, some economists and market commentators attributed the development to the restored investors’ confidence in the bourse, which they said is connected to the general belief that the economy would rebound before the end of Q2’17.
Most of them projected that the recent stability witnessed in the international crude oil market, and Presidency’s dialogue with the Niger Delta militants, which has reduced disruption of oil production, would boost the economy and catapult it out of the lull.
Chairman, Nigeria Economic Summit Group, Mr. Kyari Bukar, explained that the two factors have increased the hope for brighter prospects both for the economy and the quoted firms listed on the floor of the exchange, coupled with the intervention by the Central Bank of Nigeria on foreign exchange market.
He said, “Since we didn’t get out of recession by Q2, we will get out before the end of the year, which is the reason behind the recent rebound of the stock market as its market capitalization rose to its highest height in about nine years (N13 trillion).
“But the concern for us as a nation is that the growth must be at a higher percentage rate for it to translate into jobs, and the well-being of the average citizens, among others.”
Similarly, an economic analyst with United Capital, Mr. Victor Ojo, explained that taking a cursory look at some of the economic policies rolled out by the Federal Government, the performances of the companies have come to stay.
“The signs are indicating positive progress and gradual walk to economic recovery. To actualise the projected recovery, the Federal Government had put in place, some measures which are quickly translating to improved business outlook for manufacturing and non-manufacturing companies,” he said.
Within the period, the Federal Government also came out with an economic roadmap, the Economic Recovery and Growth Plan, which boosted confidence in the economy. But analysts point to the Central Bank of Nigeria’s new foreign exchange market, especially with the introduction of Investors & Exporters forex window as the greatest boost to corporate performance and the economy, through the improved liquidity in the forex market.
SECTORAL INDICES REACT
Breakdown of the corporate results showed that the pharmaceutical sector, which has been witnessing lull in the past years at the exchange, led the gainers’ chart at the end of trading on August 9, 2017 as it recorded 77 per cent rise from N6.69 billion as at the end of H2’16 to N11.84 billion by the end of H1’17.
This was followed by the consumer goods sector, which rose by 64.2 per cent from N222.21 to N364.82 billion, while the agriculture sector came third with 58.6 per cent as it increased from N19.64 billion to N31.14 billion within same period.
The banking sector trailed, pooling N653.5 billion against N604.02 billion recorded by the six banks that have so far released their results. However, the banking sector is projected to out-perform all other sectors when results of Tier-1 banks are released later this month.
The oil and gas sector showed significant rebound in profitability with huge 990.5 per cent growth from a -N56.88 billion negative position to N6.39 billion. This jump in profitability followed reduction in the level of losses recorded by most of the companies in the sector compared to the corresponding period in 2016. The sector’s performance was driven by the earnings posted by Oando Plc, Boc Gases, Total Nigeria Plc, MRS Oil and Mobil Oil among others.
Oando Plc led other companies analysed in the sector, rising by 129.8 per cent to close the period at N266.98 billion in comparison to N116.24 billion in the corresponding period. The company accounted for 40 per cent of the sector’s total turnover.
BOC Gases followed by 77 per cent growth from N926.61 million achieved in H1’16 to N1.21 billion. The company, however, accounted for mere 0.2 per cent the sector’s turnover volume. MRS Oil Plc placed third, rising by 16.2 per cent to N62.48 billion from N53.78 billion and accounted for 9.5 per cent of the sector’s turnover volume.
BOC Gases towered above others in terms of profitability. The company’s pre-tax profit rose by 496 per cent from N33.45 million in H1’16 to N199.40 million. It was followed by Caverton Offshore Group Plc 140 percentage growth to N938.03 million from N2.40 million loss position, while Forte Oil Plc placed third with 26.1 per cent from N4.26 billion Profit Before Tax recorded in H1′ 2016 to N4.74 billion.
The consumer goods sector, which recorded minimal profit in 2016 due to rising cost of raw material and high cost of other manufacturing inputs occasioned by forex scarcity during the period, came second in terms of percentage growth.
The sector achieved huge 352.9 per cent growth to N63.875 billion in H1’17 against N14.105 billion in H1’16, while the conglomerates sector, which also ended H1’16 in negative profit figures, came third with 246.9 per cent growth.
The sector recorded N6.387 billion pre-tax profit against N56.882 billion loss before tax in H1’16, representing 990.5 per cent growth. This represents 0.2 per cent of the total pre-tax profit for the period.