How 7 listed firms earned N1.01trn in one year

...As investors lose N291.5bn in one week

Motolani Oseni

Not less than seven multinational companies and financial institutions listed on the Nigerian Stock Exchange (NSE) recorded a whopping N1.01 trillion Profit Before Tax (PBT) at the close of the financial year ended 31st December 2018.

But in spite of these positive earnings by the considered listed firms and other companies that have released their 2018 financial result, the equities market of the NSE ended last week trading activities on a downward trend with investors losing a total sum of N291.5 billion.

Looking at N1.01 trillion profit declared by Dangote Cement Plc, Zenith Bank Plc, Guaranty Trust Bank Plc (GTBank), Stanbic Bank Holdings Plc, Nestle Nigeria Plc, Nigerian Breweries Plc, and Seplat Petroleum Development Company Plc in 2018, they grew their earnings by 17.7 per cent compared to N854.5 billion reported in 2017 financial year results.

The above companies maintained a dividend payout policy to their shareholders, a key contributing factor that has impacted on their share price on the NSE.

Also, worthy of note is the fact that financial institutions among the seven companies considered in this piece reduced their impairment loss on financial and non-financial instruments, which is another factor that aided growth in profits during the year under review.

However, Nigerian Breweries out of the seven companies reported a decline in profit PBT, attributable to slow sales and excise duty expenses that was introduced by the Federal Government in 2018.

The multinational breweries company reported 36.6 per cent drop in PBT to N29.42 billion from N46.46 billion reported in 2017.

But Dangote Cement with increased sales in Nigeria reported a 3.9 per cent increase in PBT to N300.81 billion in 2018 from N289.59 billion reported in 2017, leading other listed companies on NSE in terms of profitability.

Similarly, Zenith Bank reported N231.7 billion PBT in 2018, which represented 16.2 per cent increase over N199 billion reported in 2017 while GTBank came close with N215.6 billion PBT in 2018 from N197.68 billion reported in 2017, translating into 9.1 per cent increase.

Another financial institution, Stanbic IBTC Holdings reported N88.15 billion report from N61.2 billion reported in 2017.

In addition, Nestle Nigeria’s PBT grew by 22.6 per cent to N59.75 billion from N46.8 billion in 2017 while Seplat Petroleum Development Company reported N80.6billion PBT in 2018, 499.2 per cent increase over N13.5 billion reported in 2017.

As for dividend payout to shareholders, Nigerian Breweries payout to shareholders came as a surprise as the company reported weak corporate earnings. Despite 41.2 per cent decline in profit after tax, the management of Nigerian Breweries maintained its dividend payment policy, proposing a total dividend of N373 kobo per share after (2017: N3.13 kobo per share) based on the issued share capital of 7,996,902,051 ordinary shares of 50 kobo each subject to approval by shareholders.

The company in 2016 had proposed N3.58 dividend, 0.6 per cent or N0.02 below N3.60 dividend that was paid to shareholders in 2015.

On the heels of improved profits, the management of Dangote Cement proposed a dividend of N16.00 per 50 kobo ordinary share for 2018 financial year from N10.50 per 50 kobo ordinary share paid in 2017.

Meanwhile, GTBank proposed a final dividend of N2.45k per unit of ordinary share held by shareholders in addition to interim dividend of 30k per unit of ordinary share bringing total dividend for 2018 financial year to N2.75k per unit of an ordinary share.

The shareholders of GTBank had approved a total dividend of N2.70 per unit of ordinary share for 2017 audited results.

For Zenith Bank, the board had declared an interim dividend of N0.30 and a final dividend of N2.50 per share 31 December 2017: interim-N0.25, final- N2.45) from the retained earnings account as at 31 December 2018.

In addition to N20 per share interim dividend already paid, the Board of Nestle Nigeria proposed a final dividend of N38.50 per share for 2018 shareholders’ approval.

In addition, the board of Seplat Petroleum Development Company has recommended a final dividend of $0.05 per share for 2018 financial year.

Commenting on these developments, the Managing Director, Cowry Assets Limited, Mr. Johnson Chukwu, said the steady increase in the nation’s economy impacted companies earnings.

He said: “I think an improvement over the previous year’s economy which led to existing from recession played a critical role in companies reporting a good profit.

“Because these companies are operating within a macroeconomic environment and we have seen the improvement in GDP from 0.80 per cent growth in 2017 to 1.93 per cent in 2018 that is beginning to reflect in the performance of corporate organisation particularly those in the financial services industry.

“But you might as well note that there has been a gradual improvement in their Non-Performing Loans which is a critical factor in determining their profitability.

“Upon going the pipeline, we also see marginal improvement in the bottom line which can attribute to the marginal improvement in the growth rate of the economy.

“So, based on current economic indicators, we see further expansion in GDP of the economy, we should expect that corporate organisation maintained better performance this year.”

Also, the Managing Director, Highcap Securities, Mr. David Adnori, said, “Steady improvement in the macroeconomic environment at which these companies operate play a critical role.”

Speaking from a shareholders perspective, Chairman of Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, said: “It is a good performance by these companies and that is the resilience from Nigerian companies, even as the economy is hard and tougher.

“I think with prudence, we also should give kudos to the management of these companies that have reported the wonderful result.

He added: “The likes of GTBank and Zenith Bank do not disappoint when it matters most and that is what has been keeping the banks.”