Despite harsh operating environment, MTN Nigeria Communications Plc, Dangote Cement Plc and 20 others companies in the banking, cement manufacturing, Fast-Moving Consumer Goods (FMCG), petroleum marketing sectors, among others reported Profit Before Tax (PBT) of N1.97trillion in nine months of 2022.
The 22 companies’ nine months of 2022 combined PBT is about 15 per cent higher than the N1.72 trillion PBT recorded in the same period in 2021.
THISDAY analysis of the firms financial report revealed that they reported N1.48trillion profit after tax in nine months of 2022, representing an increase of 12 per cent from N1.32trillion reported in the corresponding period in 2021.
The PBT and PAT performance in the period under review indicate that the corporate world has shaken off the adverse impact of the macro economic challenges and may outperform analysts’ expectations in 2022 full year performance.
Major global economies remain fragile Post COVID-19 pandemic and the nine months of 2022 saw a slew of Central Bank of Nigeria (CBN) interest rate hikes as the Monetary Policy Committee (MPC) adopted monetary tightening measures amidst heightened inflationary pressures.
As advanced economies focused on curtailing inflationary pressures in the face of lingering supply-demand imbalance, listed companies were faced with rising energy prices that have adversely reduced profits in the period under review.
Extract from the nine months of 2022 earnings revealed that MTN Nigeria Communications, followed by Dangote Cement and Zenith Bank in the banking sector, are the most profitable companies on the Nigerian Exchange Limited (NGX).
With about 20.7 per cent increase in revenue to N1.46trillion in nine months of 2022, MTN Nigeria Communications reported N400.67billlion PBT, representing an increase of 25 per cent from N321.35billion reported in nine months of 2021.
The telecommunication giant also announced N269.04billion PAT in nine months of 2022 from N220.31billion reported in nine months of 2021.
The CEO, MTN Nigeria Communication, Mr. Karl Toriola in a statement stated that, “Our operating environment remained challenging in the first nine months of 2022. The on-going global macroeconomic and geopolitical volatility continued to drive up energy, food, and general inflation, with the annual inflation rate in Nigeria rising to a 17-year high of 20.8per cent in September 2022.
“Supply chain uncertainties were exacerbated by the availability of foreign currency needed for capital expenditure. These headwinds continue to put severe financial pressure on consumers and businesses. Against this backdrop, we continued to support our communities and sustain investment in the coverage and capacity of our 4G network and the rollout of 5G sites, with a focus on expense efficiencies and disciplined capital allocation.
“This has underpinned a resilient commercial and financial performance in the period, also enabled by the unwavering support of our customers and stakeholders, as well as the hard work and commitment of our people.”
For Dangote Cement, its revenue stood at N1.18 trillion in nine months of 2022, an increase of 15.17 per cent from N1.022 trillion reported in nine months of 2021.
However, hike in production cost of sales, finance cost and selling and distribution expenses impacted negatively on the company’s PBT dropped to N335.9 billion in nine months of 2022, representing a decline of 17.16 per cent from N405.55 billion reported in nine months of 2021.
Dangote Cement also reported N213.1billion PAT in nine months of 2022, representing a decline of 23.4 per cent from N278.25billion reported in nine months of 2021.
Further analysis showed that the banking sector accounted for N875.84billion out of the total N1.97 trillion PBT generated by the 22 listed companies in the nine months of 2022, while PAT generated by the nine banks closed nine months of 2022 at N743.98 billion.
THISDAY investigated revealed that Zenith Bank, followed by Guaranty Trust Holding Company (GTCO) led the sector in PBT.
Zenith Bank grew its PBT by 12.6 per cent to N202.55 billion in nine months of 2022 from N179.81billion in nine months of 2021, while GTCO’s PBT stood at N169.72 billion in nine months of 2022, representing an increase of 11.7 per cent.
The Group Chief Executive Officer, GTCO, Mr. Segun Agbaje, in a statement said; “The Group’s 3rd quarter result reaffirms our strategy for long-term growth and underscores our capacity to deliver sustainable strong performance despite the volatilities in our operating environment.”
Similarly, Seplat Petroleum that reported N77.47billion PBT in nine months of 2022, representing an increase of 100.6 per cent from N38.63billion reported in nine months of 2021, just as Nigerian Breweries Plc reported N19.09 billion PBT in nine months of 2022, representing an increase of 50 per cent from N12.74billion reported in nine months of 2021.
The management of Nigerian Breweries in a statement noted that its latest performance saw the return of market seasonality characterised by lower volume performance.
Nestle Nigeria Plc reported N58.4billion PBT in nine months of 2022 from N51.58billion in nine months of 2021, while Cadbury Nigeria Plc announced N4.02 billion PBT in nine months of 2022 from N2.16 billion in nine months of 2021.
However, Totalenergies Marketing Nigeria joined Dangote Cement to announce decline in PBT to N18.78 billion in nine months of 2022. The finance cost of N3.34 billion in nine months of 2022 from N1.27billion in nine months of 2021 played a critical role in Totalenergies Marketing Nigeria decline in PBT in the period under review.
Capital market analysts have expressed concerns over increasing macro economy challenges, lamenting its impact on listed companies’ higher earnings and possible impact on dividend to shareholders.
Reacting on companies’ corporate earnings, the Managing Director of APT Securities & Funds Limited, Mallam Garba Kurfi expressed concerns over hike in operating expenses caused by inflation rate.
According to him, “The likely factors responsible for some of the companies’ low performance may be the combination of falling of naira value and rising of overhead cost due to the fact that they operated in full operations with the attendance of full staff unlike the previous year when most of the staff were at home.
“There was increase in cost of operations that cut-across all the sectors. Most of these companies transport goods and services with big trucks and they consume a lot of diesel. Many banks have reduced working hours due to the cost of diesel as some have adopted the use of off-grid sources of power to generate electricity.
“We must give credit to the management of these companies as they maintained positive performance despite all these challenges. It has been a challenging first nine months of 2022. Most of the cement manufacturing companies reported a significant increase in revenue but the cost of production and transportation affected their profitability.”
The CEO, Wyoming Capital and Partners, Mr. Tajudeen Olayinka said investors in the stock market have not reacted to impressive corporate earnings released so far, blaming it on uncertainty surrounding the economy.
He noted that Zenith Bank, among others reported an increase in interest income and managed their income from other non-banking operations.
In addition, Chief Operating Officer at InvestData Consulting Limited, Mr. Ambrose Omordion said the nine months ended September 30, 2022 corporate earnings released so far by MTN Nigeria Communication, among others have shown impressive performance that is disconnected from domestic and global economic headwinds.
He expressed that the management of these companies are doing their work and it is expected to improve stock prices once there is liquidity improvement in the system.
According to him, “companies on the NGX have shown strength in revenue and profitability. Yet, we have seen that economic fundamentals still trailing but companies on the NGX have reported positive performance compared to the forecast for these companies. Due to the lack of liquidity in the system, we have not seen a positive response to these performances on their stock prices.
“Financial performance of the banks has shown more positive outings by the Tier-1 banks that control almost 60 per cent of business activities in the economy. Most banks’ earnings surpassed the inflation figures to show how resilient the sector has been over the years.”