Nigerian businesses are facing enormous challenges due to macroeconomic issues. While sustaining its recovery from the 2016 recession, the Nigerian economy grew by 2.3% in 2019. This growth appears quite inadequate when compared to the annual population growth of between 2.6% and 3%.
Against the background of a challenging economic and business environment, Nigerian businesses have some key risks that they face in the course of their operations. The outbreak of the coronavirus pandemic has exacerbated some of the risks that these businesses face.
Prior to the coronavirus outbreak, the highest concerns for Nigerian businesses across different sectors were the regulatory, foreign exchange volatility and fiscal & monetary policy.
The Covid-19 came with the risk of financial loss arising from the emergence of the disease and its impact on businesses. This risk is fueled largely by the health crisis, the lockdown measures (local and international) that have been put in place to address the pandemic and the apprehension of investors. Consequently, the Covid-19 impact on Nigerian businesses can be classified into 3 major channels and they are the supply channel, the demand channel and the financial channel.
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Professional service firm, KPMG, presented a report on Top Business Risks that Nigerian Business executives will face in 2020/2021, after conducting a quantitative survey. These risks are –
- Regulatory Risk; This reflects the significant anxieties executives have continued to have over regulatory uncertainties as a result of increased regulatory scrutiny and sanctions within the country. This also includes uncertainty about the actions to be taken by regulators to cushion the impact of the coronavirus pandemic on the country. This ranges from tax laws to the minimum wage amendment act, and Police Trust Fund Act among others.
- Fiscal & Monetary Risk; The fiscal policy risk has been elevated by the Covid-19 impact and a sharp drop in oil prices below the initial budget benchmark. This has led to a downward review of the FG 2020 budget benchmark and the expenditure pattern. This will lead to a reduction in economic activities and consumer spending. The risks and opportunities around monetary policies are also critical given the role CBN has to play in our fiscal tight environment. The channel through which the monetary policy directly impacts corporates is credit, specifically lending rates.
- Foreign Exchange Volatility Risk; This carried extreme impact especially among multinational corporates for reasons like importation and capital repatriation.
The oil price movement in 2020 is expected to remain weak due to low oil demand triggered by Covid-19 and supply glut.
In 2019, Nigeria’s foreign reserves depleted by $4.42 billion ending the year at $38 billion. Presently, the reserve is down to around $35 billion and continuous free fall of the foreign reserve increases the risk of devaluation.
‘Against the background of the collapse of investor confidence in the wake of the Covid-19 crisis, global financial conditions, the principal determinant of capital flows to emerging and frontier markets have tightened.’
- Cyber-security Risk; The business ecosystem is rapidly evolving across different sectors and economies. Advancement in digital technology has continued to enable business innovations and agility across the world. Cybersecurity directly affects the resilience of organisations, economy, and individual safety.
‘The volume, sophistication and the ever-involving nature of cyber-attacks in recent times, demands every organization to adopt innovative approaches to the management of cybersecurity risks’
- Political Risk; In 2020, with the country now outside the electoral cycle, we do not expect the manifestation of this form of political risk which is defined by the prospects for the disruption of business on account of political instability, unlike last year.
‘Another way that political risk impacts the business community are through policies that emanate from the political process. The risk arises when the political harmony leads to policies that are unfavourable for businesses because, in that event, the absence of a mitigating opposing political force to contest and debate such policies or to prevent their enactment and implementation is elevated’.
- Technology Infrastructure Risk; This risk examines the inadequate information technology infrastructure and ERP system to effectively and efficiently support the current and future needs of businesses.
‘This risk can be considered the highest in the financial sector despite huge investments by banks into upgrading and acquiring new digital technology tools like cloud computing, artificial intelligence, and diverse software. Technology, media, and telecommunication industry consider this risk as number 2 risk.’
- Customer Attrition Risk; This risk examines the loss of key customers and patronage resulting from perceived or actual inability to meet customers’ expectations. Customers expect organizations to keep up with their demands and will often compare their experiences across sectors using the best experience as the baseline for all others.
‘Additionally, the shape of the economic landscape over the last few years has made customers more sensitive to the quality of experience they receive and their perception of value for money. There are higher attrition risk and decline in brand loyalty in some sectors’.
- Talent Shortage/Attrition Risk; This risk examines the level and quality of skills, knowledge, and experience required to achieve business objectives and/or sustain growth.
‘Changing skills in demand, increased talent mobility, shifting employee expectations and the integration of human and intelligent automation are reinventing the workplace’. The 2 key factors that contribute to widening talent gap are quality of education and talent migration/brain drain of highly skilled Nigerians to countries like the US, Canada, UK, Australia.
- Business Continuity Risk; Organizations are faced with several threats of potentially disruptive and unexpected adverse developments in their operating environment, including pandemic, wars, terrorist attacks. This risk can impact on the profitability and cash flow for an organization due to an immediate decline of revenue and ultimately the going concern of a business if not adequately managed.
- Governance Risk; This risk examines the ineffective frameworks, processes, or practices by which the organization is controlled and directed.
In today’s corporate world, a sound corporate governance system has become a strong determinant of companies’ economic fortune, operational sustainability, and longevity. It also sets the tone for the relationship between the board of directors, management, employees, and other stakeholders including the regulators. It also provides a framework for transparency, fairness, and accountability leading to profit maximization, promoting investors’ confidence, and ultimately creating jobs.
Cutix Plc forecasts N148 million profit in Q4 2021
Cutix Plc has projected that its revenue will double and profit will increase by 9% to N148 million.
Cutix Plc has projected that in the fourth quarter of its financial year 2021, its revenue will double and profit will increase by 9% to N148 million.
These projections were made by the company in a recent earnings forecast issued by the Management, and signed by the Company’s CEO and CFO.
Key highlights of the earnings forecast for Q4 ended April 30, 2021
- Revenue to increase to N1.66billion, 100% Q-o-Q.
- Cost of Sales to increase to N1.16 billion, 70% Q-o-Q.
- Distribution, Admin & Other expenses to increase to N232.89 million, 14%% Q-o-Q.
- Other Income to remain unchanged at N2.50 million,
- Finance Charges to increase slightly to N47.38 million, 3% Q-o-Q.
- Operating income to increase to N227.83 million, 14% Q-o-Q.
- Taxation is projected at N79.74 million.
- While Profit attributable shareholders is projected at N148.10 million.
The earnings forecast was made on the ground that the Nigerian economy will continue improve, as the country recovers from the impact of COVID-19. In this regard, revenue in the fourth quarter of 2021 will be slightly higher than the revenue projected in the third quarter of 2021.
However, the increase in the cost of sales driven by the input cost will pressure profitability to the tune of N148.10 million, which is 9% higher than the profit after tax made in the corresponding quarter of 2020.
PZ Cussons proposes dividend payout of N397 million to the shareholders
The Board of Directors of PZ Cussons Nigeria Plc has proposed the payment of N397 million to the shareholders of the company.
The Board of Directors of PZ Cussons Nigeria Plc has proposed the payment of N397.047 million to the shareholders of the company who currently hold the 3,970,477,045 fully paid ordinary shares of the company.
This disclosure was made public by the company in a notification issued and signed by the Company Secretary, Jacqueline Ezeokwelume, today the 7 January 2021.
She explained further that if the dividend of ten (10) Kobo per share recommended by Directors is approved by members at the Annual 72nd General Meeting, the dividend payments will be made on Monday, 1 February 2021.
What you should know
- The Register of Members and Transfer Books of the Company will be closed from Monday, 11 January 2021 to Friday, 15 January 2021 (both dates inclusive) for the purpose of preparing an up-to-date Register of Members.
- However, only shareholders whose names appear in the Register of Members and Transfer Books at the close of business on 19th October 2020 will receive the dividend on Monday, 1 February 2021.
What they are saying
Mr. Gbenga Oyebode, MFR, the Chairman of PZ Cussons Nigeria Plc, in his address said:
- “Fellow shareholders, the Board of Directors is recommending to the shareholders at this AGM, a dividend pay-out of N397,047,700 representing 10 Kobo per share (2019: 15 Kobo per share). If approved, the dividend will be paid to shareholders on Monday, 1 February 2021 after deducting the appropriate withholding tax.”
Neimeth proposes N123.45 million dividend to be distributed to shareholders
Neimeth has proposed a total final dividend of N123.45 million to be distributed to the shareholders of the company.
The Board of Directors of Neimeth International Pharmaceuticals Plc, has proposed a total final dividend of N123.45 million to be distributed to the shareholders of the company, as final dividend for the period ended 30th September 2020.
This information is contained in a corporate action announcement dated 30th December 2020, issued and signed by the Company Secretary, Mrs Florence Onyenekwe.
According to the announcement, the final dividend which sums up to N123.45 million when approved at the next Annual General Meeting (AGM) on 9th March 2021, will be paid to shareholders of the company who own the 1,250,844,000 ordinary shares of the company. This translates to a Final Dividend payment of 6.5 Kobo per share.
What you should know
- The final dividend of 6.5 Kobo per share will be paid for all the outstanding 1,899,157,107 ordinary shares of the company. This gives a total dividend of N123,445,211.95, to be distributed to the shareholders of the company.
- To enable Neimeth’s Registrars, Meristem Registrars and Probate Services Limited, prepare for the payment of the final dividend, the Register of Shareholders will be closed from 23rd February 2021 to 28th February 2021.
- The dividend will be paid on 12th March 2021, electronically to shareholders whose names appear on the Register of Members as at 12th March 2021, and who have completed the e-dividend registration and mandated the Registrar to pay their dividend directly into their Bank accounts.
- Shareholders with dividend warrants and share certificates that have remained unclaimed or are yet to be presented for payment or returned for validation are advised to complete the e-dividend registration or contact the Registrar.