The combined profit after tax of 46 companies listed on the Nigerian Stock Exchange fell by 7.78 percent at the end of the first quarter of 2019, a development that analysts, researchers and other stakeholders have attributed to the current bearish runs in the market. The decline in profit after tax was more prominent among the firms listed in tourism and hospitality as well as in healthcare sub sector.
The analysis which covered 46 firms featured five stocks from the banking sub sector; two cement firms; three conglomerates; six in food and beverages sub sector; five in healthcare; nine insurance and re-insurance firms; three in IT; four manufacturing firms; five oil and gas; four from tourism & hospitality business, and paints and chemicals; as well as two from the transport sub sector.
The combined gross revenue of the 46 firms rose by 8.47 percent within the period to N1.28 trillion at the end of March 2019 as against N1.19 trillion realised in similar period in 2018. Finance costs for the coverage firms increased by 3.66 percent to N32.75 billion up from N31.59 billion during the reference period.
Meanwhile tax payment declined by 23.07 percent from N66.56 billion same period last year to N51.20 billion by March 2019. Profit after tax (PAT) for the coverage firms declined by 7.76 percent from N169.33 billion in March 2018 to N156.19 billion by March 2019.
Cement Company of Northern Nigeria (CCNN) recorded the highest revenue growth of 219 percent among the firms covered in the analysis as demand for its products saw its revenue for the period rise to N16.89 billion from N5.29 billion during the reference period. It was followed by Julius Berger and E-Tranzact which grew their revenue by 78.13 percent and 68.27 percent respectively. On the contrary, Okomu Oil, Premier Paints, SUNU Insurance recorded decline in revenue in the first quarter of this year.
Eterna , CWG , Fidson and AXA Mansard paid the highest finance costs during the current period compared with 2018. Eterna paid N293.6 million as finance cost in the first quarter of 2019, higher than N116.45 million in 2018 by 152.13 percent. CWG paid N24.21 million as finance cost representing an increase of 142.64 percent over N9.98 million it paid in the first three months of 2018. Similarly, Fidson Healthcare paid N393.32 million as finance cost in the first three months of this year, amounting to an increase of 57.34 percent over N249.99 million same firms paid in similar period in 2018.
Cadbury Nigeria and CWG gave shareholders hope which 2,200 percent and 1,121 percent increase in the profit after tax respectively. Cadbury Nigeria’s PAT rose to N506.75 million up from N22.03 million in corresponding period in 2018. CWG’s PAT increased to N48.81 million from N4 million in similar period in 2018. The share price of Cadbury ended the week at N11.80 per share representing 18 percent YTD increase, whereas at N2.54 per share, CWG remained unchanged YTD.
Meanwhile, our coverage firms in the healthcare sub sector include Ekocorp, Fidson, GlaxoSmithKline (GSK), May & Baker and Union Diagnostics, and all of the reported a decline in profit after tax at the end of the first quarter. Ekocorp continues to reel in losses as it posted a loss after tax of N53.92 million which was a bit lower than loss after tax of N66.18 million at the end of q1 2018.
With a profit after tax of N144.89 million, Fidson Healthcare’s Q1 bottom line was lower than its corresponding period of N202.80 million by 28.55 percent. GSK posted a PAT of N102.44 million which was a 60.34 percent decline when compared with N258.29 million made same period last year.
May and Baker recorded a PAT of N133.59 million in the first quarter of 2019, lower by 66.98 percent when compared with N404.57 million it realised in the first quarter of last year. And Union Diagnostics’ PAT for the first quarter of 2019 fell by 67.56 percent from N101.21 million last year to N32.83 million this year.
Analysts and stakeholders in the market have attributed the bearish run in the nation’s capital market to flat results reported by most companies at the end of the quarter.
“ Q1 earnings have been a mix bag. Whilst companies like UBA, Access and CNN showed strong growth in top and bottom lines, others reported flat and or negative performance. Hence, it may be right to partly attribute the broadly bearish market to the relatively weak Q1 earnings.
“Albeit, investors are on the sideline ahead of the announcement of new cabinet and leadership of monetary authority, particularly as such appointments may have notable influence on monetary and fiscal policies, going forward. For instance, the orientation and policy drive of the CBN Governor can potentially influence monetary policy around exchange rate management, which remains the domino variable for the market”, said Abiola Razaq, head investor’s relations, the United Bank for Africa.
Furthermore, companies listed in the tourism and hospitality sub sector recorded decline in profit after tax. Ikeja Hotels’ PAT fell by 42 percent; Capital Hotel recoded 46 percent decline in the same metric; Transcorp Hotels’ PAT fell by 50 percent while that of the Tourist Company of Nigeria ended in a loss for the quarter.
‘The unimpressive earnings across stocks in most sectors have been a major drag on the market sentiment in this period. Despite analysts’ predictions and expectation for a market rebound after Q1 2019, the recent companies’ performance, especially when you look at the heavyweights in the market, have made us changed our outlook”, said Chinonye Nnewuihe, senior analyst with Meristem Securities.