The economic downturn hitting Nigeria has shown face in 7-Up Bottling Nigeria Plc’s numbers as the company’s profit dropped and sales increased marginally. The company’s March 2016 audited financial statement showed sales grew by 3.85 percent to N85.23 billion from N82.45 billion in 2015.
The single digit growth at the top line came as inflation ramped up last year leading to an increase in input costs. 7 up Bottling was unable to translate top line growth to the bottom lines as net income fell by 53.08% to N3.34 billion on the back of rising cost of sales that dampened margins.
The directors of the company recommend to members the payment of a dividend of N1, 024,944,581 (2015:N1, 761,623,498) representing N1.60 per share (2015: N2.75 per share), on the issued share capital of 640,590,363 ordinary shares of 50 kobo each (2015: 640,590,363 ordinary shares of 50 kobo each). The dividend is down 42% from the year before.
Seven Up share price rose 2% to N142 as at end of business 29th of June. The dividend payment thus represents a dividend yield of about 1.1% clearly indicative of an over valued stock. Seven Up typically attracts a dividend yield of about 2.5% based on its tight liquidity. That would represent a share price based on dividend yield of about N64 suggesting that the stock might be overvalued by as much as N80.
More to follow…