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FOCUS: The drum business has failed Greif Nigeria Plc in 2018 

The company recently released its third quarter 2018 financial result, and it is abysmal.

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Greif Nigeria Plc

Welcome to Nairametrics’ weekly company profile, a column solely dedicated to spotlighting some of the little-known corporates whose shares are listed on the Nigerian Stock Exchange (NSE). This week, our focus is on Greif Nigeria Plc, a company which operates in the industrial goods sector of the economy.

Greif Nigeria Plc recently released its third quarter 2018 financial result which, unfortunately, shows an abysmal performance. Both revenue and profit declined, continuing a pattern this year whereby it struggles to grow.

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Read on for all the useful information about the company; its long history in the country, business model, the markets it serves, financial performance, and more on the factor(s) behind its poor performance so far in 2018.

About Greif Nigeria Plc’s long history in Nigeria

Like most companies, Greif Nigeria Plc initially started out as a limited liability company. Incorporated in 1940 under the company Ordinance (CAP 38), it has existed for 78 years, making drums for industrial packaging. But a lot has changed about the company during the time it has existed. First of all, its initial name (Metal Containers of West Africa Limited) was changed to Van Leer Containers Nigeria Limited in 1969.

The changes in brand identity continued. In line with the Companies and Allied Matters Act (CAP 20), the company’s name changed to Van Leer Nigeria Plc in 2004. The corporate identity changes did not stop until the company eventually became Greif Nigeria Plc, later in 2004.

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The company is based in Lagos, where it continues to manufacture and distribute steel and plastic drums. These drums are used for the packaging of liquid raw materials such as crude oil, chemicals, etc. It is a subsidiary of Greif International Holding B.V, a company which has been operating in the global product packaging industry for over 140 years. The parent company is listed on the New York Stock Exchange. It currently operates in over 40 countries around the world.

Picture depicting the production process for the drums

The company’s target market

Greif Nigeria Plc targets Nigerian companies that require steel drums to package products for shipping. For this reason, the company’s factories are strategically located in three industrial hubs namely Apapa in Lagos, Koko in Delta State and Kaduna, the capital of Kaduna State. A typical example of Greif’s target market is Chellarams Plc, a conglomerate which, among other things, manufactures and distributes chemical (ChellChem).

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A look at the company’s segments

Note that Greif Nigeria Plc generates 90% of its revenue from operations in Apapa, Lagos. This is understandable, considering the fact that Lagos is the hub of manufacturing and Apapa, the shipping hub of Nigeria. Unfortunately, the company’s other factories do not generate as much revenue. For instance, while the Kaduna plant generated just 10% of revenue in the first quarter of 2018, the Delta State operation generated 0% of the company’s total revenue during the period.

Based on this lack of performance, the Board decided in May 2018 to shut down production in those states. This would enable the company to “embark on Apapa factory site improvement, capital expenditure and overhaul to meet minimum.” as released in a statement.

Here are some key members of its Board of Directors

  • Mr Olukunle Adebayo Obadina is the Managing Director. He holds 72, 333 units of shares in the company.
  • Mr Adedayo Abiodun Olowoniyi serves as the company’s Chairman. No shareholdings in the company are listed in his name, based on information obtained from the company’s recent financial reports.
  • Mr Gaius Adetayo Omotayo recently retired as an Executive Director. He owns 115, 133 units of shares in the company.

The company’s substantial shareholding structure

Greif Nigeria Plc’s ownership structure is in the following order:

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  1. Greif International Holding B.V: 51% 
  1. The Van Leer Nigerian Education Trust: 23% 
  1. Nigerian shareholders: 26%. 

A brief look at its competition

In Nigeria today, there are several players in the packaging industry. But only two are closely related to Greif Nigeria Plc in terms of business scope. They are Nampak Nigeria Plc and Avon Crowncaps. Two companies that are equally involved in the production of different kinds of containers. Once listed on the Nigerian Stock Exchange, they have since delisted but continue to be major players in the market.

About the company’s financial performance

Last week, it released its third quarter 2018 result. Revenue from continuing operations declined by 31% year on year, with N405 million reported for the period ended July 2018, as against N591 million reported in July 2017. Similarly, the company recorded a 156% loss for the period, having reported N24.8 million as against N44.3 million in July 2017.

At this rate of underperformance, it would be impossible for the company’s full-year 2018 financial report to surpass that of 2017.  As a matter of fact, there is a strong possibility that it will run at a loss by the end of the financial year unless drastic action is taken in the next few months.

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Way forward…

It is surprising that the company’s operation in Delta State was unable to generate revenue, to the extent that a decision was made to shut it down. That region is rife with crude oil exploratory activities, with many oil companies that ship thousands of barrels of oil. The fact that Greif Nigeria could not take advantage of these opportunities with their steel drums, makes for a curious case. But the good thing is that the opportunity exists for them to take advantage of it.

Moving on, the company should consider diversifying its operations into more areas of need. It should learn from its parent company which is involved in all round product packaging, including detergents & surfactants, paints and coatings, lubricants, food and beverages, pharmaceutical and personal care, etc.

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Patricia

Emmanuel covers the financial services sector for Nairametrics. Do you have a scoop for him? Well then, contact him via his email- [email protected]

1 Comment

1 Comment

  1. Makinde

    September 3, 2018 at 7:05 am

    It appears most of these small NSE companies are struggling

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Companies

Lafarge Africa Plc. announces its board meeting and closed period for Q2 2020 

The notification which was duly signed by General Counsel & Company Secretary.

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Lafarge Africa

Lafarge Africa Plc. notified the Nigerian Stock Exchange and the investing public that he closed period will commence on Wednesday, 8th July 2020 until the unaudited financial statement for the second quarter ended 30th June 2020, is released to the Nigerian Stock Exchange. 

In a disclosure on the Nigerian Stock Exchange, it wrote: “We hereby notify the Nigerian Stock Exchange and the investing public that a meeting of the Board of Directors of Lafarge Africa Plc has been scheduled to hold on Thursday, 23rd July 2020 to consider the second quarter financial results of the Company for the quarter ended 30th June 2020.”  

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The notification which was duly signed by General Counsel & Company Secretary, Mrs. Adewunmi Alode explained further stating that “Accordingly, no Director, employee, persons discharging managerial responsibility and Advisers of the Company and their connected persons may directly or indirectly deal in the shares of the Company in any manner during the closed period.” 

Over the past few months, it made a few board changes with the retirement of two of its Non-Executive Directors, as well as the appointment of three new DirectorsIt had also spun off its South African subsidiary, Lafarge South Africa Holdings (LSAH), last year. 

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READ MORE: NSE’s statement in reaction to the Visionscape Municipality Bond Default

Lafarge Africa’s Q1 2020 revenue was up 9.8% year-on-year to N63.7 billion, driven by higher Cement Sales (a figure up 11% year-on-year to N62.3 billion) which offset the weakness in Aggregate and Concrete (down 21% y/y to N1.4bn). Its EBITDA grew by 2.4% year-on-year to N19.3 billion as well. As at Tuesday the 7th of July, the share price of the company was N10.00 

 

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Companies

AXA Mansard Insurance Plc gives notice of Annual General Meeting 

The AGM will be live-streamed to enable shareholders and stakeholders participate.

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AXA Mansard Insurance Plc

Insurance firm, AXA Mansard Insurance Plc., has given notice of its board of its Annual General Meeting (AGM) scheduled for Wednesday, July 29, 2020, at 10:00 a.m.  

The announcement which was disclosed by Nigerian Stock Exchange (NSE) in a corporate disclosure on July 7th, 2020 and signed by Company Secretary, Omowunmi Mabel Adewusi read, “Notice is hereby given that the twenty-eighth annual general meeting of AXA Mansard Insurance Plc. will hold at the Oriental Hotel, no. 3, Lekki Road, Victoria Island, Lagos on Wednesday, July 29, 2020, at 10:00 a.m.” 

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READ ALSO: AXA Mansard divests from its pension and real estate ventures

As noted, the purpose of the AGM is to transact the following business: 

  1. To receive the Audited Financial Statements for the year ended December 31, 2019, and the Reports of the Directors, Auditors and Statutory Audit Committee thereon 
  2. To authorise Directors to fix the remuneration of the Auditors 
  3. To elect Directors and 
  4. To elect members of the Statutory Audit Committee.  

In order to ensure that all relevant stakeholders can be a part of the AGM, the company will also be streaming the AGM live. It noted that “This will enable shareholders and other stakeholders who will not be attending physically to follow the proceedings.” 

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The link for the live streaming of the Meeting will be made available on the Company’s website at www.axamansard.com. 

READ MORE: Sterling Bank’s earnings to remain pressured but valuations still attractive

Recall that a few months ago, in March, the company’s Board of Directors announced the appointment of John Dickson as the company’s new Non-Executive Director. A month earlier, it also disclosed its plan to sell its pension management subsidiary (AXA Mansard Pensions Ltd) and some undisclosed real estate investments. 

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Its unaudited financials for the period Q1 2020 reveal a growth across revenue and profit lines. Gross written premium grew by 21% from N17.4 billion earned in Q1 2019 to N21 billion in Q1 2020. Profit for the year for the group grew by a commendable 120% from N890 million in Q1 2019 to N1.9 billion in Q1 2020. 

As at Tuesday, the 7th of July when markets closed, the share price of the company was N1.59. The company’s EPS stood at 0.33 while its price to book ratio stood at 0.6082. 

 

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Companies

NSITF board to investigate suspended MD and others over financial misconduct

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NSITF, FG moves to scrap hazard allowances earned by State Governors

The board of directors of the Nigerian Social Insurance Trust Fund (NSITF) has revealed that it will investigate the activities of the suspended Managing Director, 3 Executive Directors, and 8 other senior management staff over financial breaches and gross misconduct.

This was disclosed by the Chairman of the board of NSITF, Mr. Austin Enajemo-Isire, in a statement in Enugu on Sunday July 5, 2020.

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Enajemo-Isire said that the Managing Director and other top management staff of the organization would have the opportunity to clear themselves of any wrongdoing with the probe panel which was being set up.

READ MORE: Ecobank appoints Aissatou Djiba Diallo to oversee its fintech initiatives 

While reacting to claims that the suspension did not follow due process as President Muhammadu Buhari did not approve it, Enajemo-Isire said that the approval for the suspension of the affected staff had been conveyed to the Labour Minister in a correspondence referenced SGF. 47/511/T/99 of June 30, 2020.

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According to the Chairman, “The minister has conveyed this approval and directives to me for necessary action in terms of setting up a board-driven investigative panel.

READ MORE: Nigeria’s debt rises to $79.5 billion, as debt to revenue ratio worsens

“This is to give the affected officers the opportunity to clear themselves of the financial and procurement breaches and acts of gross misconduct and other infractions that gave rise to their prima facie indictment.

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“It is in this light that I have decided to call a virtual meeting of the management board on Tuesday, July 7, 2020, to consider the modalities for our action.”

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He, therefore, appealed to staffers of NSITF and their social partners to keep calm and exercise restraint.

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A few days ago, Nairametrics reported the suspension of the Managing Director and some senior management staff over corruption allegations. However, the management in its reaction debunked that claim and said that the President did not approve their suspension but that rather, it was the sole decision of the Labour Minister, Chris Ngige, who they said was overreaching himself.

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