From brewers to drugmakers, numerous firms in Nigeria have seen their first-quarter earnings take a tumble on the again of the money disaster and issues about elections that dampened financial exercise.
The money shortages occasioned by the naira redesign coverage of the central financial institution mixed with petrol shortage, excessive inflation and rising rates of interest to compound the challenges confronted by households and companies within the first three months of the yr.
Personal-sector exercise within the nation shrank in February for the primary time since June 2020 as output and new orders plunged amid the steep decline in shopper spending, based on Stanbic IBTC Financial institution Buying Managers’ Index (PMI). The PMI, which measures the efficiency of the personal sector, fell to 44.7 in February from 53.5 within the earlier month. It declined additional to 42.3 in March.
A number of firms throughout totally different segments of the financial system have reported lower-than-expected gross sales for Q1, which drove down the income of some and have others swing to loss.
Dangote Cement Plc and 5 different listed firms suffered a mixed income decline of N69.03 billion within the interval, based on knowledge compiled by BusinessDay from their unaudited monetary outcomes.
Africa’s largest cement producer mentioned its Nigeria operations offered 3.6 million tonnes (Mt) of cement, down 24.6 p.c in comparison with the identical interval of final yr.
It mentioned the money crunch within the nation and detrimental sentiments across the basic elections led to a slowdown in key personal and public infrastructure investments.
“The money unavailability impacted development employees’ every day wages and retailers’ capacity to pay for cement in money,” the agency mentioned. “Revenues for the Nigerian operations declined by 12.9 p.c to N280.3 billion, as a result of uncertainties throughout the interval.”
Though its group income was down 1.6 p.c to N406.7 billion and revenue earlier than tax fell 6.1 p.c to N146.82 billion, Dangote Cement’s web revenue rose 3.4 p.c to N109.5 billion.
UAC of Nigeria Plc (UACN), which operates within the meals and beverage, actual property, paint and logistics sectors, noticed its income drop by 11 p.c to N24.6 billion in Q1. It posted a loss earlier than tax of N937 million, in contrast with a revenue earlier than tax of N979 million in the identical interval of final yr.
It mentioned gross sales volumes declined throughout all segments besides fast service eating places, whose gross sales progress was supported by the rise in company shops throughout Lagos and Abuja.
Fola Aiyesimoju, group managing director of UACN, mentioned the agency’s efficiency within the quarter would have been stronger however for difficult macro-economic and sociopolitical challenges.
“Elements that adversely impacted efficiency had been money shortages and misplaced buying and selling days on account of elections,” he mentioned.
Nigerian Breweries Plc reported a loss earlier than tax of N17.44 billion for Q1 2023, in contrast with a revenue earlier than tax of N20.76 billion in the identical interval of final yr as income fell to N123.31 billion from N137.77 billion.
“The influence of the money crunch which led to a close to collapse of fee channels in addition to the safety and security uncertainties related to the overall elections created disruptions within the financial system,” Uaboi Agbebaku, its firm secretary, mentioned.
He mentioned the overall brewed product market suffered a double-digit (mid-twenties) quantity decline versus the identical interval in 2022. “We had been capable of largely mitigate the amount decline influence on our income because of our applicable pricing technique.”
Notore Chemical Industries Plc, a producer of fertilisers and different substances for enhancing the fertility of soil and water, suffered a 75 p.c decline in income to N4.10 billion. The agency swung to a lack of N7.93 billion from a revenue of N1.55 billion in the identical interval of final yr.
GlaxoSmithKline Client Nigeria Plc, which manufactures, markets and distributes shopper healthcare and pharmaceutical merchandise, generated N4.02 billion in income, down from N7.36 billion in Q1 2022. Its revenue earlier than tax declined to N230.19 million from N285.83 million.
ABC Transport Plc, an interstate transport firm, reported a 22.46 decline in its income to N1.45 billion. Its loss earlier than tax widened to N80.68 million from N6.11 million in Q1 2022.
Karl Toriola, MTN Nigeria Communications Plc, mentioned the money shortages “impacted our prospects’ capacity to recharge by bodily airtime vouchers (affecting largely prospects who didn’t have entry to digital recharge channels) and over-the-counter transactions inside our MoMo agent community”.
Learn additionally: Availability of cash fails to ease inflationary pressures – KPMG
The corporate mentioned this resulted in migration to digital recharge platforms, which mitigated the influence of money crunch.
Its earnings earlier than curiosity, tax, depreciation and amortisation (EBITDA) grew by 17.7 p.c to N302.7 billion however its EBITDA margin declined by 1.3 share factors to 53.3 p.c. Revenue earlier than tax grew by 8.5 p.c to N155.8 billion, in comparison with a progress of 31.3 p.c in Q1 2022.
With the ripple impact of the money shortage reverberating throughout sectors, the nation’s financial progress is predicted to say no within the first three months of the yr.
Yemi Kale, the nation’s former statistician-general who’s now chief economist at KPMG Nigeria, estimated in mid-March that Q1 nominal GDP would scale back by between N10 and 15 trillion because of challenges sourcing money.
“It is because about 40 p.c of Nigeria’s N198 trillion GDP in 2022 is casual, of which about 90 p.c is cash-based. Additional 30 p.c of formal sector GDP is cash-based. This implies N106.9 trillion of whole GDP is cash-based,” he tweeted on the time.
Bismarck Rewane, managing director of Monetary Derivatives Firm Restricted, forecast in early March that the GDP progress would gradual to 1.25 p.c in Q1 2023 from 3.11 p.c a yr earlier partly as a result of naira crunch influence on mixture demand.
