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Markets

GSK Consumer surmounts 2017 headwinds, but struggles remain

The principal activities of the company are manufacturing, marketing and distribution of consumer healthcare and pharmaceutical products.

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GSK Consumer Nigeria has risen above the turbulent 2017, which saw its bottom line dip sharply. While its performance may beat last year, it remains weak, especially in consumer healthcare.

About the firm

GlaxoSmithKline Consumer Nigeria Plc was incorporated on June 23, 1971. 46.1% of its issued shares are held by GlaxoSmithKline United Kingdom and the rest by Nigerian shareholders.

The principal activities of the company are manufacturing, marketing and distribution of consumer healthcare and pharmaceutical products.

Recent results

Results for the nine months ended September 30, 2018, show that revenue increased from N11.4 billion in 2017 to N13.9 billion in 2018. Profit before tax stood at N507 million, as against a loss before tax of N651 million in 2018. Profit after tax stood at N351 million in 2018, compared to a loss after tax of N651 million in 2017.

Pricing

Current Share Price: N13.25
Year High: N34.85
Year Low: N11
Year to Date: -38.69%
One Year Return: -30.63%

Price Outlook

Possibilities of the stock rising sharply are quite low. Market sentiments as a whole, are currently negative. The stock is currently trading 20% above its year low of N11.

Price Valuation

GSK Consumer is currently trading at 10.6 times earnings, slightly higher than the average price earnings ratio on the Nigerian Stock Exchange (NSE). The stock is currently trading at a much higher PE than other listed players, such as Fidson Healthcare which is trading at 6.90 times earnings.

Company Outlook

2018 has been a difficult year for manufacturers in the country. Economic growth has remained sluggish, and consumer spending is also weak.

GSK had a difficult 2017 largely due to a sharp rise in costs. Costs have largely been contained this year.

The Consumer Healthcare segment consisting of oral care products, over-the-counter (OTC) medicines and nutritional healthcare products, however, continues to struggle. The unit made a N701 million loss in 2017 and a N126 million loss, as at Q3 2018.

Full year performance while likely to trend higher than 2017, would be one of the company’s weakest in the last five years.

The company paid an ordinary dividend of N0.40 per share last year and a special dividend of ₦7.10 per share.

Q3 2018 earnings per share stood at N0.29, an indication that it may be able to meet last year’s ordinary dividend payment.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.You can contact him via [email protected]

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    Company Results

    Airtel grows revenue from Nigeria by 21.9% in 2020

    Airtel recorded a 21.9% growth in revenue from Nigeria in its 2020 full year report.

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    Regulation forces Airtel Africa to initiate shares listing in Malawi , Airtel Africa’s profit up 12.9%, customer base reaches 111.5 million in Q2

    Airtel Africa Plc has posted a revenue growth of 21.9% in its Nigeria business to stand at $1.55 billion in 2020, with 23.5% growth in East Africa, and 10% in Francophone Africa. The telco reported an increase of 14.2% in its gross revenue in its 2020 earnings.

    This was disclosed in the telco’s year ended March 30 earnings, which was released on Wednesday.

    Highlights of the result

    • Revenue from voice was up by 11%, data revenue grew by 31.2% and mobile money was up 35.5% in 2020.
    • Reported revenue grew by 14.2% to $3.91 billion in 2020, while Q4 2020 revenue stood at $1.04 billion, indicating a 15.4% increase (year-on-year).
    • Constant currency underlying revenue growth was 19.4%, with Q4 2020 growth of 21.7%.
    • Growth was recorded across all regions: Nigeria up 21.9%, East Africa up 23.5%, and Francophone Africa up 10%; and across key services, with revenues for voice up 11.0%, data up 31.2%, and mobile money up 35.5%.
    • Underlying EBITDA was $1.79 billion, up by 18.3% in reported currency, and 25.2% in constant currency.
    • The underlying EBITDA margin was 46.1%, adding 181 basis points (210 basis points higher in constant currency). The underlying EBITDA margin for the quarter ended March 2021 was 47.7%, an increase of 389 basis points in constant currency.
    • Operating profit increased by 24.2% to $1.12 billion in reported currency, and 32.8% in constant currency.
    • Free cash flow was $647 million, up by 42.8% from the prior year.
    • Basic EPS was 9.0 cents, down by 12.6%, largely due to last year’s exceptional items and a one-off derivative gain. Excluding these, basic restated EPS rose 44.5%. EPS before exceptional items was 8.2 cents.
    • The telco’s customer base grew by 6.9% to 118.2 million, with increased penetration across mobile data (customer base up 14.5%) and mobile money services (customer base up 18.5%). The recent slowdown in customer base growth has been due to new SIM registration regulations in Nigeria.
    • The Board recommended a final dividend of 2.5 cents per share, making the total dividend for the year to be 4.0 cents per share.

    What Airtel is saying

    Chief Executive Officer, Airtel Africa Plc, Raghunath Mandava, said, “In these challenging times, I want to say a huge thank you to all our employees, our business partners, and governments and regulators who have supported us, and in turn facilitated our continued support to the economies and communities we serve.

    Our performance has been strong, with reported growth of 13.6% in underlying revenue and 18.3% in underlying EBITDA, and constant currency growth of 19.4% and 25.2% respectively.”

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    Currencies

    “Don’t deposit more than $5k monthly,” banks inform customers

    Reports reaching Nairametrics indicate some commercial banks have started sending new transfer limits to their customers.

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    The US dollar remains king, U.S dollar gains against major currencies, America threatens China with sanctions., U.S dollar slumps against major currencies, investors become optimistic about global demand, U.S Dollar Stands Firm, Foreign Exchange Traders Remain Neutral 

    Reports reaching Nairametrics indicate some commercial banks have started sending new transfer limits to their customers.

    Emails sent to some customers that were shared with Nairametrics reveal banks are informing customers that they can only deposit $5,000 in cash into their accounts monthly. They also advised the customers to transfer electronically instead of cash deposits. One of the banks also indicated that cash deposits are no longer allowed for some account holders.

    “There is a $5,000 monthly cash deposit limit. We encourage you to make more deposits via electronic transfers. Cash funded transfers to beneficiaries with accounts in other banks in Nigeria are no longer allowed. There will be no restriction to the frequency or value of transactions for accounts funded through inflows but supporting documents are required before payments are processed. Cash deposits are no longer allowed for Wealth Management Investments.”

    Some of these rules are actually not new as they contain forex transaction guidelines issued by the central bank last year as part of its efforts to curtail demand for forex and reduce the utilization of the banking system to facilitate black market dealing in forex.

    What this Bank Transfer Limit means

    • You cannot deposit more than $5,000 cash monthly (cumulative) into your bank domiciliary accounts.
    • However, you can deposit more than this if it is an electronic transfer. This is a lot more difficult to achieve for retail buyers of forex and the exchange rate is often higher.
    • You are also required to provide supporting documents backing the inflow of dollars into your account especially if the transfers are from one personal account to another.

    Last week, the CBN announced it was indefinitely extending its Naira 4-dollar scheme for diaspora remittances which was introduced in March, suggesting the program may have achieved success by its standards.

    Continue Reading

      





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