The Insurance sector of the Nigerian stock exchange is not one to be entirely bullish about if you are a lover of fundamentals. Fundamental Investing refers to the use of a company’s past performance (profits and revenues) to project its performance for the future and thus value the stock today.
There are over a dozen insurance companies in Nigeria quoted on the stock exchange and quite frankly most of them are what we term zombie stocks. In this article, we will highlight why we think they are zombie stocks.
Unic Insurance happens to be a serial offender when it comes to submission of results as it is yet to submit its 2015 and 2016 results. Though the firm was recently acquired by Liberty holdings a South African company. Its 2014 results which are the most recent on the NSE website show a loss after tax of N687 million. The company has failed to pay dividends since 2013.
Equity assurance is currently trading at 50 kobo which is the minimum price a stock can trade on the Nigerian Stock Exchange (NSE). The company is also yet to release its 2016 audited financial statements SIX MONTHS after it ended. The company had negative retained earnings of N5.6 billion as at December 2015, so paying dividends is out of the question.
Guinea Insurance is also at the 50-kobo club on the NSE. In addition, the company has failed to submit its 2016 audited year results. The company had negative retained earnings of N900 million as at Q3 2016, and has not paid dividends in over two years.
While Cornerstone Insurance has released its 2016 results and made a profit, the stock remains at the 50 kobo mark for over a year, thus returning no capital appreciation to shareholders. The company has negative earnings of N797 million, so dividend payment is far off. The company hasn’t paid dividend for at least 3 years.
Mutual Benefits insurance has been stuck at the 50-kobo bus stop for at least 3 years. The company made a loss of N1.2 billion in 2016. The company had accumulated losses of N1.2 billion as at December 2016, and has not paid dividends in over 3 years.
Staco insurance has made sustained losses in the past 3 years and has remained at the 50-kobo floor. The company made a loss after tax of N1.2 billion in its financial year ended 2016. Negative retained earnings of N4.9 billion as at FY 2016 means hopes of the company paying dividends are very dim.
Goldlink Insurance is yet to release its audited financial statements for 2016 and is also stuck at the 50-kobo floor. The most current results available on the NSE website are for Q3 2015 and the company had negative retained earnings of N11.9 billion. The company has also not paid dividends for several years.
International Energy Insurance
IEI has had a turbulent few years and is currently being run by an interim management board. The company, like most insurance firms on the exchange has been stuck at the 50-kobo mark. It has also failed in paying dividends for several years. The company made a loss after tax of N945 million in 2016.
Sovereign Trust Insurance
Sovereign Trust Insurance has remained stuck at the 50-kobo floor like many insurance firms listed on the NSE. The company has also failed to pay dividends and was one of the 17 companies that was suspended from trading for late submission of results. The company has also failed to pay dividends in several years.
Universal Insurance was one of the 15 firms suspended by the NSE for non-submission of its 2016 audited results. The company’s shares have also remained at the 50-kobo mark. The company has made negative retained earnings and losses since 2014, thus paying no dividends.
COVID-19, VAT, FX scarcity adversely impacted our operations in 2020 – Nigerian Breweries boss says
NB Plc’s operations in 2020 were adversely impacted by the COVID-19 pandemic, VAT increase and FX devaluation.
The management of Nigeria’s leading brewer, Nigerian Breweries Plc has revealed that its operations in 2020 were adversely impacted by the COVID-19 pandemic, VAT increase, FX devaluation and scarcity of foreign exchange.
This statement was made by the Managing Director of Nigerian Breweries, Mr Jordi Borrut Bel, at the company’s pre-AGM media briefing for the financial year-end 2020, which held in Lagos this week.
He noted that the increase in the brewer’s cost in 2020 was due to the COVID-19 pandemic which disrupted the company’s operations, as well as the increase in VAT, devaluation and FX scarcity which has put pressure on input cost.
The Nigerian Breweries boss explained further that the increase in cost could not be fully attributed to currency devaluation and foreign exchange scarcity.
He explained that the increase in costs of goods sold, as reported in its audited financial results, could also be linked to the increase in the volume of goods sold, as the company’s sales volume in 2020 increased by almost the same percentage as the cost of goods sold.
To deal with this challenge going forward, he revealed that the company is focused on the supply chain, and will continue to seek out ways to mitigate any of the price increases coming from FX scarcity.
The company’s profitability in question?
An analysis of the company’s result revealed that despite the 4.3% increase in net revenue from N323.00 billion recorded in 2019, to a total of N337.01 billion in 2020, the company’s profit declined significantly by 53.3% to N7.53 billion.
Speaking on this, Jordi Borrut in his statement at the press briefing noted that the brewer’s business performance in 2020 was quite impressive especially in the face of the COVID-19 pandemic and economic recession. Despite these challenges, the company maintained a strong and healthy balance sheet.
“There was a slight reduction in profitability but compared to the previous year, the business witnessed an improved growth in revenue. The significance of this is that the business became more stable and healthier,” he said.
What you should know
- Nigerian breweries, being the largest brewer in the country, maintained its stance in terms of generating profits year-on-year. The company emerged as the only brewer to record a profit of N7.37 billion from its operations in 2020, 54.3% lower than 2019 figures (N16.1 billion).
- From this, the leading brewer was able to pay shareholders a total dividend of N7.5 billion, translating to a dividend of 94 kobos per share – a dividend payout in which exceeds 100%.
- While Guinness and International Breweries made a loss of N12.6 billion and N24.9 billion respectively, this reality impacted their ability to pay their shareholders dividends in 2020.
Highest paid Nigerian bank MD/CEOs of 2020
Bank MD/CEOs in Nigeria earned a combined N1.5 billion in salaries in 2020.
The banking sector, especially commercial banks, is one of the most profitable sectors of the Nigerian Economy churning out profits of close to a trillion in 2020 alone. They are also one of the highest employers of labours in the country employing over 93,000 Nigerians.
Sitting at the helm of affairs is the Chief Executive/Managing Director, the highest-ranking executive in the organization saddled with the responsibility of making the best corporate decisions, oversight of the execution of the organisation’s corporate strategies and most importantly increasing the shareholders’ return. The buck basically stops on their table.
Thus, these enormous responsibilities also come with a considerable executive compensation for their service making them ostensibly the highest-ranking staff of the bank.
In typical Nairametrics fashion, we bring to you a list of the highest-ranking bank CEOs for 2020 based on their executive compensation (exec comps). The bank MD/CEOs under our review earned over N1.5 billion in salaries in 2020.
The data was sourced from the published audited accounts of the bank and verified by Nairametrics Research.
Nairametrics | Company Earnings
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- Cornerstone Insurance Plc notifies stakeholders of late submission of financial statements.
- NSE approves delisting of 11 Plc shares.
- Berger Paints Nigeria Plc reports a 67% decline in Profits in FY 2020.
- MTN Nigeria raises N73.5 billion from CP Issuance to finance operations.
- Jaiz Bank proposes dividend worth N884 million for shareholders.