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Manufacturing

‘Enlarged CAP’ will be the largest in Nigeria’s paint industry – MD, CAP Plc

The MD of CAP Plc has disclosed that Enlarged CAP will become the largest player in the Nigerian paints market.

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CAP Plc is running at a risk of increased bad debts

The Managing Director of CAP Plc, David Wright, has disclosed that the post-merger entity of Chemical Allied Products Plc and Portland Paints and Products Nigeria Plc will become the largest player in the Nigerian paints market by market share.

This statement was made by Wright, and subsequently verified by the Managing Director of Portland Paints, Bolarin Okunowo, at the Facts Behind the Merger and Digital CGC for CAP Plc and Portland Paints Plc, organized by the Nigerian Stock Exchange.

Facts behind the merger

  • In a bid to create an overview of the merging entities, CAP plc according to Wright is the 2nd largest player in the Nigerian Paints and Decorative market, with an estimated market share of 11.4%.
  • He stated that the company, despite operating in a highly fragmented industry was able to generate a revenue of N8.4 billion in 2019.
  • Wright noted that CAP is the most capitalized Paints and Decorative Company listed on the Nigerian Stock Exchange, as of February 1st 2020, the company has a market capitalization of over N14 billion.
  • The Managing Director of Portland Paints, Bolarin Okunowo, on the other hand, disclosed that Portland Paints is the fourth-largest player in the Nigerian Paints and Decorative market, with an estimated market share of 3.5%, and was able to generate N2.6 billion in revenue in 2019.
  • She added that the company stands on NSE as the 2nd most capitalized Paints and Decorative Company, with a market capitalization of over N2.78 billion as of February 1st 2020.

About the companies

CAP plays within the premium and standard segments of the Paints, Decorative and Coatings market, with flagship brands such as Dulux positioned in the premium segment and Caplux in the standard segment respectively.

Portland Paints, on the other hand, leverages the benefits embedded in the construction and oil & gas industries, with robust productive offerings, which cut across decorative, industrial and marine/protective coatings segments.

The flagship brand of the company, Sandtex, is renowned for its exceptional quality for residential, commercial and industrial buildings.

On the flip side, the marine and protective coatings offerings of the company, are marketed under the Hempel brand, a leading global brand that delivers the highest quality protection for valuable marine, oil and gas and heavy metal assets.

What to expect from the post-merger entity,Enlarged CAP

  • The post-merger entity of CAP and PortPaints, “Enlarged CAP” is expected to dominate the Nigerian Market as the largest player in the paints and decorative industry.
  • The Enlarged CAP will float an enlarged product portfolio with strong brands, and a rich product mix of CAP and PortPaints in the standard, premium, industrial and marine/protective segments.
  • The merger will bring together a formidable product portfolio, leveraging the strength of powerful brands like Dulux, Sandtex, Caplux and Hempel.
  • This diversified product range will span through the decorative and marine segments, this diversity in product range will help to create a well-diversified entity, with the broadest distribution channels and retail footprint in Nigeria.
  • The broad brand portfolio, expanded products offering, broad distribution capabilities and the benefits from internal economies owing to large scale operations will drive in more value, and this will lead to an increase in revenue and profits.
  • The operational and administrative efficiencies which will be unlocked with this merger, will help to create more value for shareholders of the company.

What you should know

  • CAP and Portland Paint currently rank number 2 and 4 respectively in the Nigerian Paints and Decorative market. The completion of the merger will create the largest player in the Nigerian Paints and Decorative market by market share, with a combined estimated market share of 14.9%.
  • The product portfolio of the company will cut across the Decorative, Industrial, Marine and Protective segments, with 26 product offerings in total.
  • These product offerings as implied by the management will be distributed across 91 stores across 32 states in the country, as the enlarged entity will leverage the benefits of a wider distribution network.

Omokolade Ajayi is a graduate of Economics, and a certificate holder of the CFA Institute’s Investment Foundation Program. He is a business analyst, and equity market researcher, with wealth of experience as a retail investor. He is a business owner and a stern advocate of Financial literacy, who believes in the huge economic prospect of the Nigerian Payment channels and Fintech space.

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Manufacturing

Industrial index down by 0.72%, as shares of BUA Cement, Beta Glas, Cutix decline

NSE Industrial index declined by 0.72% to close at 1,922.02 index points.

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Manufacturing sector in Nigeria and the reality of a "new normal"

The Nigerian Stock Exchange Industrial Index at the close of trading activities for the week ended 17th February 2021, depreciated by 0.72%, to close at 1,908.19 index points.

At the end of the seventh trading week, the Index shed 13.83 index points in total to close lower for the week at 1,908.19 index points, as shares of BUA Cement, Beta Glas, Cutix declined on NSE.

A preview of the performance of the index revealed that as of the close of trading activities on Friday 17th February 2021, the index stood at 1908.19 index points, from 1922.02 index points at the close of trade on Friday 12th February 2021.

What you should know

The NSE Industrial Index was designed to provide an investable benchmark to capture the performance of the Industrial Sector. It comprises the most capitalized and liquid companies in the industrial sector and is based on the market capitalization methodology.

The index monitors the performance of ten industrial companies on the Nigerian Stock Exchange which includes Dangote, BUA, and Lafarge Cement.

The overall performance of the companies was relatively bearish as the index closed on a negative note with three losers and three gainers, while the other four companies closed flat.

BETAGLAS (-9.75%) led the loser’s chart for the week, while PORTPAINT (+14.44%) led the gainer’s chart.

Top gainers

  • PORTPAINT up 14.44% to close at N3.25
  • CAP up 5.56% to close N19.00
  • WAPCO up 1.01% to close at N25.00

Top losers

  • BETAGLAS down 9.75% to close at N50.00
  • CUTIX down by 5.70% to close at N2.15
  • BUACEMENT down by 1.37% to close at N72.00

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Manufacturing

Nigeria’s manufacturing sector contracts by 2.75% in 2020

NBS report reveals that the real GDP of Nigeria’s Manufacturing Sector contracted by 2.75% in 2020.

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The Manufacturing Sector contracts by -2.75% in 2020, bringing 2 years of growth to an end

The recent Gross Domestic Product (GDP) report released by the Nigerian Bureau of Statistics (NBS) has revealed that the real GDP of the manufacturing sector contracted by -2.75% in 2020.

This signals the end of a two-year run of real growth in the sector.

The contraction in the real GDP of the Manufacturing sector, leaves the sector in a vulnerable position, noting that the sector according to NBS computation grew by 0.77% in 2019 and 2.09% in 2018.

It is essential to understand that in nominal terms, without factoring in the change in prices in 2020, the Nominal GDP of the sector recorded a growth rate of 16.44% at the end of the year, compared to 34.73% in 2019.

READ: OFFICIAL: Nigeria’s oil sector accounts for 93.8% of export revenue

Highlights

  • At the end of the fourth quarter of 2020: the manufacturing sector’s Real GDP contracted by –1.51% (year-on-year). This is lower than the corresponding quarter of 2019 and the preceding quarter by –2.75% points and –0.01% points respectively.
  • The growth rate of the sector, on a quarter-on-quarter basis, stood at 5.60%.
  • However, in nominal terms, the sector’s GDP growth at the end of the fourth quarter of 2020 was recorded at 24.60% (year-on-year), this is -1.69% points lower than 26.29% recorded in the corresponding period of 2019 but 11.06% points higher than the preceding quarter (13.54%).
  • In nominal terms, quarter on quarter growth of the sector was recorded at 5.78%
  • The Real contribution of the sector to the Nation’s GDP in the fourth quarter of 2020 was 8.60%, which is lower than the 8.74% recorded in the fourth quarter of 2019 and the 8.93% recorded in the third quarter of 2020.
  • At the end of 2020, the annual contribution of the Manufacturing sector to Nigeria’s GDP stood at 8.99%.

READ: Honeywell Flour Mills declares N120 million profit in Q3 2020/21

What you should know

The Manufacturing sector is comprised of thirteen activities: Oil Refining; Cement; Food, Beverages and Tobacco; Textile, Apparel, and Footwear; Wood and Wood Products; Pulp Paper and Paper products; Chemical and Pharmaceutical products; Non-metallic Products, Plastic and Rubber products; Electrical and Electronic, Basic Metal and Iron and Steel; Motor Vehicles and Assembly; and Other Manufacturing.

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