Analysts predict decline profit, dividend in H1 2016

Capital Market analysts have predicted decline in profit and dividend payment to shareholders in half year results of quoted companies on The Nigerian Stock Exchange (NSE).

They noted that the late policy of Central Bank of Nigeria (CBN) on foreign exchange, sharp and elongated decline in oil prices, banks hike in impairment charges for credit losses and weak purchasing power of consumers may contribute to companies’ revenue and profit decline for the first half (H1) of the year 2016..

They expressed further that quoted banks may suffer huge loss in profit and interim dividend payout to shareholders following the crisis at foreign exchange market.
Following investigations carried out by our correspondent, Access Bank Plc, United Bank for Africa Plc (UBA), Guaranty Trust Bank Plc and Zenith Bank Plc has declared an interim dividend in their half year results of 2015.

Other companies that had declared interim dividend in the half year accounts of 2015 include African Prudential, Nestle Nigeria Plc and Total Nigeria Plc.

Specifically, Access Bank in half year of 2015 proposed 25 kobo interim dividend while UBA had announced the payment of an interim dividend of 20 kobo.

GTBank and Zenith Bank in 2015 half year account declared 25 kobo interim dividend respectively.

A stockbroker at Foresight Securities & Investment Limited, Mr. Fakrogha Charles, explained that current macro economy globally and in the country might erode listed companies earnings.

He disclosed companies with impressive profit in first quarter of 2016 might struggle based on fluctuation in global oil prices, increased in inflation, and hike in operating expenses.
According to him, “we have all seen how the economy has come to play in the first half year of 2016 with global oil prices fluctuating, the Brexit and unclear Federal government economy blue print.

There are going to be marginal growth in listed companies profit given persistent economy challenges. I don’t foresee any remarkable results in the banking sector, among other sectors on the Exchange.

Charles noted that most of these companies might pay interim dividend but their performance might not be impressive compare to first quarter results of 2016.

Also commenting, Chief Executive Officer, Enterprise Stockbrokers Plc, Mr. Rotimi Fakayejo, said, “the effect of unstable price in the foreign exchange might hit banks profit in half year results but companies in the manufacturing sector might not feel the effect as most of them had gotten used to the new price of N281/Dollar.

Nigerian Breweries Plc, Nestle Nigeria Plc, among others might not record decline in profit following the management understudying of the present economy reality since last year.
Fakayejo explained further that consumption power has reduced with over 15 States not paying salary and effect of inflation has compounded the whole scenario.He noted that revenue of manufacturing companies might drop but modest loss in foreign exchange might increase profit.

The equities market had ended the first half of the year with a gain of 3.34 percent to close at 29,597.79 basis points, from 28, 642.25 basis points at which it opened in the first trading day of the year 2016.

Analysts attributed the market growth to new flexible foreign exchange policy of the Central Bank of Nigeria (CBN) that was introduced towards the end of June.