The Nigerian All Share Index, which is the broad index that measures the performance of Nigerian stocks, dropped by 2,793.43 basis points or 5.39% for Q3 ended September 2022 to close trading at 49,024.16 index points.
Checks by Nairametrics showed that activities on the Nigerian Exchange, which opened the quarter at N27.935 trillion in market capitalization and 51,817.59, index points at the beginning of trading on July 1, 2022, closed on September 30, 2022, at N26.451 trillion and 49,024.16 index points, hence has earned a quarter to date loss of about N1.484 trillion or 5.39%.
A further check revealed that the Consumer Goods Index (CGI), which measures the performance of the consumer companies quoted on the floor of the Nigerian Exchange depreciated by 6.30% during the quarter, from 623.99 index points to 584.68 points.
Despite that, consumer goods offer investors safety during recessionary times; based on the need for products such as food and cleaning products that consumers rely on regardless of the state of the economy.
According to data obtained by Nairametrics from the NGX, which focused on the poor performing consumer goods stocks during the q3, Cadbury Nigeria Plc, Unilever Nigeria Plc, International Breweries Plc, Nigerian Breweries Plc, PZ Cussons Nigeria Plc, Nestle Nigeria Plc, Champion Breweries Plc, and Guinness Nigeria Plc made the list of top eight poor performing firms with a cumulative loss of N299.497 billion in market capitalization.
These stocks were selected based on their price performance from quarter to date and are represented by percentage loss.
1. Champion Breweries Plc-1.34%
Shares of Champion Breweries Plc enjoyed a negative run during the period under review. The brewery company lost 1.34% in price during the third quarter, from N3.74 to N3.69 per share. The selling pressure drove down the market capitalization to lose N391.48 million to close at N28.890 billion at the close of trading on September 30, 2022, from the opening figure of N29.282 billion at the beginning of trading on September 1.
Champion Breweries Plc had announced its Unaudited Financial Results for the half year ended June 30, 2022, with a profit after tax of N1.076 billion compared to N445.23 million in HY 2021 representing 141.60% growth year-on-year. Curiously, despite the impressive rise in earnings, the company’s net profit margin in recent periods hovers around 15% on average. In fact, in 2020FY, it was as low as 2.25%, but stood at 15.66% in H1 2022, representing a growth of 71%-on-year.
Net profit margin measures the profitability of a company and a good net margin varies by industry, but a margin of 10% is considered average, while 20% and above is considered high or good. Comparatively, Champion Brew’s net margin is better than other key peers in the industry. For instance, in Q12022FY, Champion Brew’s net profit margin stood at 16.69% compared to Guinness’s 2.90% and Nigeria Breweries’ 0.78%
A cursory view of the financials shows that higher growth in the cost of sales has been a major factor affecting the company’s bottom line. For instance, in HY 2022, revenue rose by 42%-on year to N6.862 billion, while costs of sales rose by 46% to N4.209 billion, broadly due to the increased cost of raw materials, which is a major component of the company’s cost of sales. The cost of sales constituted 76% of the total expense, while raw materials and consumables constituted 49% of the cost of sales.
The shares of the company currently trade at N3.69 and have gained 57% year-to-date.
2. PZ Cussons Plc-3.65%
- The share price of PZ Cussons Nig Plc, decreased by 3.65% during the period under review, from N9.60 per share to N9.25 per share, reducing the market capitalization to a loss of N1.389 billion or 3.65% to close at N36.726 billion at the end of September 2022 from the opening figure of N38.116 billion.
- PZ Cussons Nigeria Plc, released its Q4 2021/22 unaudited results for the period ended May 31, 2022, reporting a profit of N758.37 million, representing an 11.71% increase year on year.
- A cursory view of the result reveals the company’s profit was driven by a significant rise in the company’s main business segments – the sale of the home and personal care products and durable electrical appliances.
- These segments delivered revenue of N25.50 billion during the period compared to N22.60 billion in the same period last year. Revenue growth from the segments was at 12.85% year on year.
- The shares of the company currently trade at N9.25 and has gained has since gained 51.6% year-to-date.
3. Guinness Nigeria Plc – 8.4%
The shares of Guinness Nigeria Plc also witnessed a negative run during the period. The brewery firm listed on the NGX and the second most capitalized brewery after Nigerian Breweries has lost 8.4% in price during the quarter, from N90.50 to N82.90. The company witnessed sell pressure, which drove down the market capitalization to lose N16.646.91 billion to stand at N181.582 billion at the close of trading on September 30, 2022, from an opening figure of N198.229 billion at the beginning of trading on July 1.
The audited results which were released to the Nigerian Exchange Group (NGX) at the financial year-end indicated that revenue increased 29% to N206.8bn versus the prior period of 2021 which stood at N160.416 billion.
The revenue was enhanced on the back of Malta sales and RTD brands despite inflationary pressure and slim household wallet.
At the analysts’ conference, the brewer said malta brand contributed 74% growth of the revenue to N60.722 billion from N34.968 billion in 2021 while Ready to Drink (RTD) spirits-based drinks followed with 56% of the revenue with N17.627 billion from N19.719 billion in 2021.
Net financing costs decreased by 94% as a result of the reduction in the net interest cost, and investments of excess naira cash in fixed deposits with banks at higher rates.
The statement also noted that the business’s profit before tax increased to N23.7bn, a 310% growth vs. the same period last year; and operating profit increased by 142% in the period under review. Higher corporate tax was driven by the increase in operating profit and reduced net finance costs.
The shares of the company currently trade at N82.90 and have since gained 113% year-to-date.
4. Nestle Nigeria Plc-13.21%
The share price of Nestle Nigeria Plc, decreased by 13.21% during the period under review, from N1,400 per share to N1,215 per share, reducing the market capitalization to a loss of N146.641 billion or 13.21% to close at N963.077 billion at the end of September 2022 from the opening figure of N1.109 trillion on July 1. Nestlé Nigeria plc has announced a 30 percent growth in revenue to N222.5 billion in its half-year (H1) unaudited financial statement for the period ended June 30, 2022, from N171.4 billion announced in prior-year (H1) results.
Nestlé Nigeria plc, a fast-moving consumer goods company in its unaudited financial statement submitted to the Nigerian Exchange Group Limited revealed a 31% increase in profit before tax (PBT) to N43.7 billion in H1 2022 from N33.4 billion accounted in H1 2021.
The group’s unaudited result showed profit after tax of N21.7 billion recorded in 2021 to N27.7 billion recorded in the comparable period of 2022, Nestlé Nigeria Plc has recorded a 28% growth in profit after tax during the half year ended 30 of June 2022.
The cost of sales was a massive increase during the period of study, reporting a 35.5% rise to stand at N142.2 billion in H1 2022 from N105 billion achieved in H1 2021, the growth in the cost of sales drives gross profit to gain a 20.7% from N66.4 billion reported in H1 2021 to N80.2 billion recorded in H1 2022.
The shares of the company currently trade at N1.215 and have since lost 21.9% year-to-date.
5. Nigerian Breweries Plc – 16.21%
- The shares of Nigerian Breweries witnessed a negative run during the quarter. The brewery firm listed on the NGX and the most capitalized brewery in Nigeria has lost 16.21% in price at the end of the third quarter, from N58.80 to N48.40. The company witnessed sell pressure, which drove down the market capitalization to lose N76.967 billion to stand at N397.891 billion at the close of trading on September 30, 2022, from the opening figure of N474.858 billion at the beginning of trading on July 1st.
- Nigerian Breweries Plc announced a total sum of N274.03 billion as revenue for the first half of the 2022 financial year, which ended on June 30, 2022. The company also recorded a profit after tax (PAT) of N19.08 billion during the period.
- According to the unaudited report and provisional results filed with the Nigerian Exchange Limited, the company experienced a 31% growth in revenue compared to the N209.22 billion recorded in the corresponding period in 2021.
- The results also revealed profit after tax for the six-month period under review rose by 142.8%, from N7.86billion to N19.08billion. Similarly, basic earnings per share in H1 2022 was 237 kobo as against 97 kobo that was recorded in H1 last year.
- According to a statement signed by the company secretary/Legal Director, Uaboi Agbebaku, the company’s increase in profit was driven mainly by top-line growth resulting from its pricing strategy and better mix.
- Further analysis of the results revealed that the cost of sales increased by 18.3%, from N131.34 billion in H1, 2021 to N155.35 billion in 2022 in the same corresponding period. Marketing, distribution, and administrative expenses also rose by 44.6%, from N58.42 billion in H1, 2021 to N84.45 billion in H1, 2022, driven by the increase in commercial activities post-COVID, rising diesel prices, and higher wages arising from collective labor agreements.
- The shares of the company currently trade at N48.40 but have since lost 3.2% year-to-date.
6. Unilever Nigeria Plc-16.89%
- Shares of Unilever Nigeria Plc have also suffered from the market slide with a loss of 16.89% in price during the quarter, from N14.80 to N12.30. The negative activities drove down the market capitalization to lose N14.362 billion to close at N70.663.57 billion at the close of trading on September 30, 2022, from the opening figure of N85.026 billion at the beginning of trading on July 1.
- Unilever Nigeria Plc recently released its unaudited financial statement for the half year ended 30 June 2022.
- According to the unaudited financial statement, the manufacturing firm reported a profit after tax of N1.906 billion for the half year, from N714.780 million the previous year, representing a growth of 167%.
- The profit was boosted by other income of N66.659 million arising from transitional service agreement income.
- According to the company, subsequent to the disposal of the Tea business in October 2021, Unilever entered into a Transitional Service Agreement with the new owner, Unilever Tea MSO Nigeria Limited. The agreement will be in place for a period of 15 months, during which time Unilever would provide production and sales support to Unilever Tea MSO Nigeria Limited in exchange for a fee.
- Revenue grew by 35.12% to N43,806 billion during the period under review from N32,420 billion reported in 2021.
- However, the cost of sales rose by 22% to N29.605 billion in 2022 as against N24.204 billion.
- The shares of the company currently trade at N12.30 but have since lost 15.2% year-to-date.
7. Cadbury Nigeria Plc – 21.09%
- The share price of Cadbury Nig Plc benefited from the market downturn dropping by 21.09% during the period under review, from N17.25 per share to N13.60 per share, decreasing the market capitalization to lose N6.835 billion or 21.09% to close at N25.543 billion at the end of September 2022 from the opening figure of N32.398 billion on July 1.
- Cadbury Nigeria Plc, a subsidiary of Mondelēz International, has continued to sustain its current repositioning drive. The company’s recently released financial highlights for the first half of 2022 (covering the period January 2022 to June 2022), showed that its turnover rose to N27.8billion in H1 2022, representing an increase of 50.5 percent over the N18.5billion recorded within the same period in 2021.
- Similarly, Cadbury Nigeria’s profit for the period under review, grew by 553.7 percent from N516million in H1 2021, to N2.34billion in H1 2022. The company’s basic earnings per share also maintained an upward trajectory, rising by 553.7 percent from 27.48 kobo to 124.68 kobo, within the same period.
- In a statement issued by the company, Oyeyimika Adeboye, managing director, Cadbury Nigeria, said Cadbury Nigeria is leveraging its resources to remain competitive in a challenging business environment.
- She said: “We operate in a tough business environment characterized by FX scarcity, the continued devaluation of the Naira, and rising operational costs. We developed some strategies internally to enable us to cope with these challenges. We will continue to create value for our consumers and deliver superior returns to our shareholders.”
- The shares of the company currently trade at N13.60 and year-to-date have appreciated by 54.6%.
8. International Breweries Plc – 21.42%
- Shares of International Breweries Plc have also dropped from the positive run. The brewery company lost 21.42% in price during the month, from N6.30 to N4.95 per share. The company’s share price drop drove down the market capitalization to lose N36.263 billion to close at N132.967 billion at the close of trading in September from the opening figure of N169.231 billion at the beginning of trading on August 1st
- The half-year earnings for the company showed a turnover of N111.4 billion, which is a strong year-on-year growth of 36%.
- Administrative and marketing expenses however grew well ahead of sales revenue at 42% to N28.7 billion and claimed a good part of the gross profit.
- A drop of 78.8% in other expenses to N2.4 billion helped to lift operating results from a loss of N16.4 billion in the same period last year to an operating profit of N5.4 billion in the half year in June 2022.
- The shares of the company currently trade at N4.50 and have lost 9.09% year-to-date.
