|
Getting your Trinity Audio player ready...
|
Consumer goods firms’ woes are mounting as the clock ticks, as half year sales dwindles, raising concerns about the inability of federal government to formulate policy that will help boost consumer spending.
Analysts say investors may perceive the unimpressive result to mean that second quarter GDP figure might turn out poor and that valuations will continue to be affected since profits are continually pressured.
The combined revenue of 10 largest firms quoted on the floor of the bourse dipped by 2.63 percent to N752.014 billion in June 2019 from N772.14 billion the previous year.
Of the firms on the Nigerian Stock Exchange 30- the list of the most liquid companies- consumer goods firms are more vulnerable to the macroeconomic headwinds.
Over the past few quarters, consumer staple companies have had to combat a combination of factors including: unrelenting smuggling activities, together with, and continued traffic gridlock in the road.
Consumer spending in Nigeria remains extremely subdued, with shoppers yet to recover from the effects of the naira devaluation, fuel price hike, and the strong price increases that were subsequently implemented.
Nigeria economy has been growing sluggishly as GDP expanded by 2.01 percent in the three months through March from a year earlier; that compares with 2.4 percent expansion in the fourth quarter.
While inflation figure for the month of June fell to a 12 months low of 11.22 percent, the figure, however, falls below the central bank’s target range of 6 percent and 9 percent.
Analysts blame the woes of these companies on the lack of policy direction of the President Muhammadu Buhari’s led administration and that federal government has to formulate policy that will help create jobs and propel economic growth.
A booming economic, where infrastructure bottlenecks are removed, allows consumers open their purse strings.
Nigerians unemployment rate is 23.10 percent, one of the highest in the world.
Drilling down the figures shows unilever Nigeria Plc’s revenue fell by 2.15 percent to N23.42 billion in June 2019 from N23.82 billion the previous year; It suffered an 18.40 percent in the Homem and Personal business.
Dangote Sugar’s revenue fell by 4.15 percent to N80.36 billion in the period under review as smuggling and influx of cheap products continues to undermine earnings.
Dangote Flour Mills’ revenue’s sales reduced by 13.95 pecent to N48.74 billion in the under review as against N56.35 billion the previous year.
Nacon Allied Industries’ suffered the steepest drop at the top lines as sales fell by 49.54 percent to N12.82 billion in the period under review from N25.76 billion the previous year.
However, some firms bucked the trend as they recorded growth in sales.
Nestle Nigeria’s sales increased by 5.05 percent to N141.91 billion in June 2019. The growth in Revenue has been largely driven by solid growth in Beverage business as the Milo RTD pack continues to gain widespread acceptance in the marketplace.
Cadbury Nigeria revenue increased by 10.96 percent to N19.45 billion in the period under review from N17.55 billion the previous year.
BALA AUGIE
