Companies
AMCON will be bullish in its recovery drive this year – Kuru
Managing Director/Chief Executive Officer, Asset management Corporation of Nigeria (AMCON) Mr. Ahmed Kuru has said that AMCON is in the process of dealing decisively with the top assets in its portfolio just as he hinted that Corporation has indeed stepped up its recovery drive in line with its fast approaching sunset. Going by the new stance, the AMCON boss hinted that all obligors of AMCON especially the politically exposed individuals and business heavyweight who hitherto thought they were untouchable will not be spared in the enforcement process that are being fine-tuned by the recovery agency.
Kuru who was fielding questions from journalists at Westwood Hotel, Ikoyi, Lagos at the weekend, where he also disclosed that AMCON has officially released its 2017 Audited Accounts said as a result of the new recovery strategy, AMCON is restructuring its operational processes to enable it go after these crop of recalcitrant debtors in a manner that has never been witnessed before in the country. But in doing so, AMCON not operate outside the laws of the Federal Republic of Nigeria as well as the AMCON Act 2010, as amended.
He said, “I want Nigerians to understand that our assignment at AMCON is not just tough but a daunting challenge so we actually deserve the support of the media and that of the general public. I think people need to pity us because we are at that stage in the life of the Corporation where we are dealing with the hardcore because the low hanging fruits have been dealt with earlier in the life of AMCON. I want you to understand that we are sitting on a substantial amount of assets, which we must one way or the other resolve on or before our sunset, which is around 2023/24.”
Kuru, said it was important for the media to have a full understanding of the magnitude of the challenges faced by AMCON because it will enable them understand the fight the Corporation is up against especially with the individuals who heavily borrowed money from banks with no intention to repay, which contributed in no small way to destroying the Nigerian economy. He insisted that AMCON played strategic role in rebuilding the Nigerian economy with the recapitalization of the banks, which he said preventing systemic collapse of the economy. He said it would have been unimaginable what would have happened to the Nigerian economy if AMCON did not intervene at the time it did.
For that reason he said, AMCON is determined to pursue every obligor in its book with all the powers the laws avail AMCON to deal with each and every one of them especially the 350 debtors of AMCON who account for almost 80 per cent of the over N5 trillion huge debt burden, which must be recovered because AMCON borrowed to purchase the Eligible Bank Assets (EBAs) during the first and second phases when it bought over the bad loans from the banks.
He continued, “Like I said earlier, we will deal with some of those key assets very soon like the Peugeot Nigeria Limited in Kaduna, CDL, Aero Contractors, Arik Air and a host of others. But I must tell you, as we close in on these individuals and entities that owe us, I want you to know that they will call us names, they will blackmail us, they will threaten us, malign and harass us. However, I can tell you that hard as they will try, we will not be deterred in going about our normal duties as mandated by law. But as we do, we ask ourselves first if the action will stand right before God Almighty; secondly, will the action be in our national interest and, is our action within the rule of law. If the answer to these three guiding principles is yes, AMCON takes decisions. It is nothing personal.”
On the 2017 Audited Account, which he described as better than 2016, he said although the Corporation was not established to make profit like commercial banks, it could still return to profit this year after losses in 2017 narrowed as the economy rebounded from its worst contraction in more than two decades. The loss for the year through December improved to 16.4 billion naira ($45.3 million) from 164.9 billion naira in 2016. What that meant is that, if the economy continues with a positive outlook as it currently experienced in line with the expectations of the Federal Government, AMCON would be expected to return to profit at the end of the 2018 financial year.
AMCON’s current performance is in stark contrast to 2016, when Kuru also hinted the media that the weak economy hindered efforts to recover loans and other assets in its hold. AMCON had acquired 12,537 Non-Performing Loans (NPLs) worth 1.7 trillion naira from 22 financial institutions, following the 2009 banking crisis. Gross earnings also increased by 23 per cent to 341.8 billion naira, which is a 21 per cent increase in interest income to 42.6 billion naira as well as the 41 billion-naira sale of Keystone Bank helped boost performance even as operating expenses rose by 16 per cent.
AMCON Executive Director Operations, Mr. Aminu Ismail earlier stated that AMCON’s costs were “driven” by an increase in the price of aviation fuel and overhead expenses for two airlines it has taken over, which is Arik Air and Aero Contractors, according to the highlights of the 2017 results. Going by Kuru’s pronouncement, the 2018 financial year may be a very busy year for AMCON as a result of the proposed disposal of these lead assets such as Aero Contractors, PAN, Arik, Delta Queen, amongst others.
Companies
Dangote Cement to extend clinker export to other African countries
Dangote is on course to sell more clinker across West Africa and commence shipment to Central Africa in H2 2020.
The Management of Africa’s largest cement producer, Dangote Cement Plc (DCP), disclosed during a virtual event yesterday, that the cement producer is set to commence clinker export to other African countries within the next few weeks.
The Acting Group CFO, Guillaume Moyen, made this known in his presentation at the joint virtual event with NSE, tagged “Facts Behind the Figures and Sustainability report’’ on Wednesday, 24th September, 2020.
Backstory: In its half-year report, the Management of Dangote disclosed that on 12 June 2020, the maiden shipment of 27.8Kt of clinker from Nigeria to Senegal left the Apapa Export Terminal.
READ: Dangote Cement’s N100 billion CP admitted on FMDQ Securities Exchange
The Management reiterated that the company is on course to sell more clinker across West Africa, and commence shipment to Central Africa in H2 2020. As it is in line with the Group’s vision of making West and Central Africa, cement and clinker independent, with Nigeria the main export hub.
The absence of limestone in much of West Africa, especially those in the coastal states, forces those countries to import bulk cement and clinker from Asia and Europe, and this is quite expensive.
READ: BUA Cement Plc posts impressive unaudited H1, 2020 financial results
However, Dangote Cement plans an ‘export–to–import’ strategy, positioning Nigeria as the main export hub of the continent, in a bid to serve West and Central Africa countries from Nigerian factories, making the region cement and clinker independent.
This is consistent with the Group’s vision of cementing Africa’s economic independence, as this would lead to lower clinker cost for pan-African operations, due to the proximity of Nigeria to these countries, as clinker landing cost will be cheaper.
READ: Nigerian billionaires lose billions amid COVID-19 pandemic
The Management emphasized that this is possible, as Nigeria can serve a potential market of 15 countries, with over 350 million people, given the county’s relative abundance of quality limestone, especially in key Southern regions.
It is important to note that DCP’s clinker volume, according to figures contained in its H1 2020 results, has increased to 60Kt from 12kt in H1 2019, which translates to 400% increase.
The benefits of DCP’s export strategy
It is noteworthy that the innovative strategy of Dangote Cement Plc is expected to;
- Cement Africa’s economic independence, and contribute to the improvement of continental, regional, and intra-regional trade, as the company seeks to make regional and continental free trade agreement a reality.
- Ensure that the increase in production due to exports, leads to increase in capacity utilization in the Nigerian operation, and in turn, reduces fixed cost per tonnes.
- Increase foreign revenue exchange for the Nigerian operation, and offset foreign exchange risks.
- Reduce clinker landing cost, by leveraging on the proximity of Nigeria to other African countries.
Some of the benefits of our export strategy are Higher capacity utilization of our facilities; Ecowas benefits; Foreign exchange; and Lower clinker cost for Pan-Africa operations – @guillaumemoyen
#NSEhostsDangote https://t.co/TGd2N6JGZw pic.twitter.com/TvPGHunsb0— The Nigerian Stock Exchange (@nsenigeria) September 23, 2020
Companies
Fidelity Bank to raise N50 billion in bonds in Q4 to refinance existing debts
The new issue will be made to redeem the existing N30 billion bond which was issued at 16.48%.
One of Nigeria’s second-tier commercial banks, Fidelity Bank Plc, has concluded plans to issue up to N50 billion ($131.3 million) in local bonds by the fourth quarter of 2020, in order to refinance existing debts as the yields drop.
The disclosure was made by the Chief Operations and Information Officer, Gbolahan Joshua, during an analyst call on Tuesday, September 8, 2020.
The crash of crude oil price globally, which was triggered by the novel coronavirus pandemic, has led to a decline in bond yields on the local debt market. This has made foreign investors to dump their local assets, leaving excess liquidity in the money market. This has also put a lot of pressure on the foreign exchange market as they look for dollars to repatriate their funds.
READ: Guinness Nigeria finding it hard to refinance its loans due to dollar scarcity
The Fidelity Bank top executive disclosed that the new issue will be made to redeem the existing N30 billion bond which was issued at 16.48%.
The global economic situation has seen yields in the debt market drop from as high as 18% about 3 years ago to less than 5% for the one-year treasury bill.
READ: GTBank, Zenith Bank, UBA record losses, investors down by N12.2 billion
Fidelity Bank had revealed that it expected to see a 15% drop in profit this year when compared to 2019 result due to the coronavirus pandemic. Its profit after tax increased by 21.9% to N12 billion for the half-year 2020.
The second-tier bank also disclosed that its income declined in the second quarter due to a downward review of lending rates on loans as a result of the economic downturn.
Companies
Heineken buys more units of Nigerian Breweries Plc
The Dutch firm has invested N276 million in NB since August, to increase its stake in the Brewer by 0.10%.
The major shareholder of the largest brewer in Nigeria, Heineken Brouwerijen B.V, has increased its stake in Nigerian Breweries, with the purchase of 233,110 additional units of Nigerian Breweries shares. This was disclosed by the company in a notification sent to the Nigerian Stock Exchange, which was seen by Nairametrics.
According to the notification, which was signed by the Company’s Secretary, Uaboi G. Agbebaku, the purchase was made on the bourse over two transactions on the 2nd and 3rd of September.
This disclosure is a regulatory requirement that must be reported to the Nigerian Stock Exchange, especially when a major shareholder or director of a publicly quoted company purchases shares in the company they own.
READ: GTBank revenue for H1, 2020 rises to N225.14 billion
The analysis of these transactions indicates that the purchase consideration for the 233,110 additional units of Nigeria Breweries shares at an average price of N39.94 is put at N9.3 million.
This purchase and previous purchases further cement Heineken Brouwerijen B.V’s status as a major shareholder; the company has accumulated a total of 7,720,236 since 30th June.
READ: Vitafoam’s 2020 oncourse to make light–work of 2019
As of June 30th, when Nigerian Breweries released its Half-year financial results and reviewed its shareholding pattern, the company had exactly 7,996,902,051 outstanding shares, with Heineken Brouwerijen B.V being the majority shareholder with 3,019,363,804 units, which amount to 37.76% of the total shares of the company outstanding.
Hence, with the current purchase of 233,110 additional units, and previous purchases in August and September 1, which amount to 7,487,126 units, Heineken’s ownership percentage of Nigeria Breweries is now put at 37.85%.
Insider transactions, both sales and purchases, are often an indication of how shareholders perceive a company’s valuation. It could also mean a possible capital raise or that the majority shareholders are strengthening their existing holdings.
READ: Heineken scoops more Nigerian Breweries shares in insider disclosure
In like manners, the purchase of the shares of Nigerian Breweries by Heineken and other majority shareholder has mopped up stray volumes on the bourse, and pushed the stock price higher by 29% or N9, from N31 it closed at on the 3rd of August to its current value of N40 with 38.2x earnings.
About the company
Nigerian breweries is the largest brewing company in Nigeria. It engages in the brewing and marketing of lager beer, stout and non-alcoholic malt drinks, and the bottling of the Schweppes range of soft drinks and Crush Orange. Its brands include Star, Gulder, Legend, Heineken, Maltina, Amstel Malta, Fayrouz, Climax, Goldberg, Malta Gold, and Life. These products are mainly sold in Nigeria and other neighbouring countries.
READ: Flour Mills and its diverse challenges
Key takes on NB’s financials
Nigerian Breweries was affected by the disruption in the global and domestic demand and supply chain, as profit after tax of the largest brewer dropped by as much as 58%, at the back of the adverse impact of the sharp contraction in economic activities.
The knock-on effect of the COVID-19 lockdown, which affected the trade segment of the business, affected the company sales and this triggered the 11% drop in revenue in the first half of the year.
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