Dangote Cement, Access Holdings, 11 Others Declare 81% Increase in PBT to N1.67tn

Kayode Tokede

Amid macro economic challenges, Dangote Cement Plc, Access Holdings and 11 other companies operating in Nigeria, and other countries in Africa reported 81 per cent increase in profit before tax to N1.67trillion in nine months ended September 30, 2023 from N920.43 billion in nine months of 2022. 

In the period under review, the 13 companies announced N1.33 trillion profit, an increase of 92.2 per cent from N694.33 billion reported in nine months of 2022.

The growth in PBT and PAT in the period under review indicated that the corporate world has shaken off the adverse impact of the macro economic challenges and may outperform analysts’ expectations in 2023 full year results.

Macro economic challenges such as inflation rate that moved to 26.72 per cent as of September 2023 from 20.77 per cent September 2022 and struggling Naira that closed September 2023 at N768.76 /Dollar from N432.37/Dollar September 2022 played a significant role in these companies’ performance in the period under review.

Major global economies remain fragile Post COVID-19 pandemic and the nine months of 2023 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.

Analysis of the companies’ nine months earnings revealed that GTCO, followed by Dangote Cement generated the highest PBT out of the 13 companies listed on the Nigerian Exchange Limited (NGX).

Following the N334.35 billion generated from foreign exchange revaluation gain in nine months of 2023, GTCO announced N433.2billion PBT in nine months of 2023, an increase of 155.24 per cent from N169.72billion reported in nine months of 2022.

The lender declared N367.42billion profit in the period under review, a growth of 181.87per cent from N130.35billion reported in corresponding period of 2022.

While commenting on the H1 2023 results, the Group Chief Executive Officer of GTCO, Mr. Segun Agbaje, in a statement saidm “Despite the challenges in the business environment, notably inflationary pressures and exchange rate fluctuations, we are starting to see the gains in the transformation of our businesses following our transition to a Holding Company structure. Improved profitability and a solid performance across key metrics reflect efficiencies and justify the investments we continue to make in technology, product development, and our people.”

He further said, “We recognise the impact prevailing economic and market conditions have on people and livelihoods and we remain committed to seeking better outcomes for our customers by ensuring that our products and service offerings support our customers and their businesses through their evolving realities, whilst also taking every opportunity to optimise stakeholder value.”

With about 29 per cent increase in revenue to N1.51trillion in nine months of 2023, Dangote Cement reported N404.89 billion PBT, representing an increase of 20.5 per cent from N335.9billion reported in nine months of 2022. 

The Cement maker reported N277.55billion profit in nine months of 2023, an increase of 30.2 per cent from N213.10 billion reported in nine months of 2022.

Dangote Cement’s net exchange loss on foreign denominated transactions, hike in production cost of sales, finance cost and selling and distribution expenses impacted negatively on the company’s PBT as the combined four indicators hits N1.16tillion in nine months of 2023 from N873.67 billion in nine months of 2022.

Speaking on the results, Chief Executive Officer, Arvind Pathak, in a statement said, “this positive nine-months result is a combination of our strong value proposition, improved operational efficiency and a sustained drive to contain cost amidst an accelerating inflationary environment. We achieved double-digit growth in Group revenue at N1.51trillion, while EBITDA rose to an all-time high of N662.8billion, up 28.5 per cent.”

“Again, we continue to show the strength in the diversity of our operations. Our pan-African operations generated a record revenue and EBITDA growth of 103.9 per cent and 255.4 per cent, respectively, contributing 41.9 per cent to Group volumes.

“This unprecedented growth was driven by sustained demand across our countries of operation. We will continue to explore emerging opportunities and export strategies around the region to further consolidate the Group performance, Pathak added.

Pathak concluded, “Looking ahead, we are at the final stage in the completion of our 1.5Mta grinding plant in Cote d’Ivoire, having commissioned our 0.45Mta Takoradi plant in the first half of the year. We are focused on improving our value proposition, anchored on our promise to deliver strong and superior cement to our unwavering customers. I am very pleased with the direction of our business and confident we will finish the year strong.”

The banking sector that comprises of GTCO, Access Holdings Plc, FBN Holdings Plc and Stanbic IBTC Holdings accounted for N1.13 billion out of the total N1.67 trillion PBT generated by the 13 listed companies in the nine months of 2023.

THISDAY analysis revealed that foreign exchange revaluation enhanced PBT of four of the banks in the period under review.

The likes of Access Holdings reported N294.42billion PBT in nine months of 22023, a growth of 100.2 per cent from N147.06billion in nine months of 2022, while FBN Holdings reported N270.33billion PBT in nine months of 2023, an increase of 156.3 per cent from N105.49billion in nine months of 2022. In addition, Stanbic IBTC’s PBT increased to N129.46billion in nine months of 2023 from N68.95billion reported in nine months of 2022.

Other companies with remarkable performance was MRS Oil Nigeria Plc that reported N4.96billion PBT in nine months of 2023, representing an increase of 232.82per cent from N1.49billion reported in nine months of 2022, as Nascon Allied Industries reported N16.31billion PBT in nine months of 2023, a growth of 282.01 per cent from N4.3billion reported in nine months of 2022.

Unilever Nigeria Plc reported N4.91billion PBT in nine months of 2023, an increase of 937.4 per cent from N473million reported in nine months of 2022, while Julius Berger declared N15.05billion PBT in nine months of 2023 from N12.16billion in nine months of 2022.

In addition, Transnational Corporation Plc declared N26.16billion PBT in nine months of 2023 from N20.87billion reported in nine months of 2022, Geregu Power reported N17.49billion in nine months of 2023, a growth of 25.3 per cent from N13.96billion reported in nine months of 2022.

Presco announced N31.72billion in nine months of 2023, a increase of 48.8 per cent from N21.3billion reported in nine months of 2022. 

However, Totalenergies Marketing Nigeria is the only company out of the 13 to declare decline in PBT to N16.6billion in nine months of 2023, from N18.78billion reported in nine months of 2022.

Cost of sales, operating expenses negatively affected Totalenergies Marketing Nigeria PBT in the period under review.

Capital market analysts have expressed concerns over increasing macroeconomy challenges, lamenting its impact on listed companies’ higher earnings and possible impact on dividend to shareholders.

Speaking, the Vice Chairman, Highcap Securities Limited, Mr. David Adnori expressed concerns over hike in operating expenses caused by inflation rate and scarcity of foreign exchange.

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. The cost of diesel is on the higher side. 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 2023. Most of the cement manufacturing companies reported a significant increase in revenue but the cost of production and transportation affected their profitability.”

On his part, 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 GTCO, 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, 2023 corporate earnings released so far by Dangote Cement, 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.

“There was an improvement in impairment charges by banks and this is attributed to the recovery of business activities in the economy as well as the rise in global crude oil prices. However, OPEX is expected to remain high due to higher cost of doing business.”