Experts link companies’ poor half-year results to recession

Operators and investment analysts in the Nigerian capital market have blamed the poor performances of quoted companies in their 2016 half year results on the dwindling fortunes of the economy.
A stockbroker and financial analyst, Mr. Emmanuel Okobor, explained that the foreign exchange crisis, inflation, abolition of Commissions on Turnover and other economic headwinds have dragged the companies into unplanned financial crisis.
“The industries are heavily exposed to the oil and gas sector, which contributes over 70 per cent of government revenue and 90 per cent of all exports. So, if the sector suffers, others would be affected,” he said.
He added that with the fall in global oil prices by nearly 60 per cent from $115 per barrel to about $44 per barrel in the last two years, thus resulting in lower government revenues, banks’ takes were further reduced.
Similarly, the leader of Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said that the economy at present was very tough.He stressed that the weakening of the oil sector had also affected the earnings of the company. “The implementation of the Treasury Single Account had reduced drastically the take-home of many quoted companies as cost of production has skyrocketed.
“The Central Bank of Nigeria had tried various economic indices to see that the economy gets back on track, but it cannot do it alone. The Minister of Finance should buckle up to the challenges of rejuvenating the economy. Although, it is not a day’s job, but things have to be done urgently,” he said.
Meanwhile, some quoted companies have suffered considerable declines in their half year results ended June 30, 2016.
For instance, Lafarge Africa plc posted a net loss after tax of N30.25 billion by the period ended June 30, 2016.
Highlights of the unaudited report and accounts showed that turnover dropped from N152.18 billion in 2015 to N107.36 billion in the first half of 2016.
FBN Holdings Plc attained Profit after Tax of N35.9 billion, down by 10.5 per cent when compared with N40.1 billion recorded within same period.
The bank’s gross earnings also dropped by 1.2 per cent to N267.9 billion, while net-interest income stood at N126.1 billion, down 5.0 per cent year-on-year.
Also, the PAT of Fidson Healthcare plc dropped by 880 per cent in the firm’s half-year result when it fell from N324.2 million in 2015 to N39.582 million as at end of June 2016. Its revenue plunged by 35 per cent, to close at N2.61 billion from N4.034 billion for the period under review.