. MTN leads with N1.77tn revenue
.Access Holdings tops banking sector with N1.59tn
A total of 24 leading companies quoted on the local bourse weathered macro economic challenges and generated a combined N13.94 trillion revenue in nine months eded September 30, 2023, representing an increase of 53.1 per cent from N9.1 trillion reported in nine months of 2022.
Analysis of the companies’ results showed that MTN Nigeria Communication Plc generated the highest revenue in the period under review, followed by Access Holdings Plc and Dangote Cement.
A breakdown showed that while MTN Nigeria reported N1.77 trillion revenue in nine months of 2023, representing an increase of 22 per cent from N1.46 trillion in nine months of 2022, Access Holdings Plc earned N1.59 trillion revenue in nine months of 2023, a growth of 75.7 per cent from N906.93 billion reported in nine months of 2022.
Nigerian and other African countries have endured the impact of interest rate hikes as the Central Banks around the world have continued to raise rates in a bid to manage inflation.
Macro economic challenges such as the inflation rate that moved to 26.72 per cent as of September 2023 from 20.77 per cent September 2022 and deprecation of Naira at the foreign exchange market to N768.76 /Dollar as at September 2023 from N432.37/Dollar September 2022 negatively affected these companies’ performance in the period under review.
However, the Central Bank of Nigeria (CBN) foreign exchange policy impacted positively on banking sector profit before tax, while those in the manufacturing sector, Fast-Moving Consumer Goods (FCMG), among others suffered heavy losses in the nine months under review.
Meanwhile, THISDAY findings from the unaudited financial reports submitted to the NGX showed that the 24 companies declared N3.05 trillion profit before tax, an increase of 54per cent from N1.99 trillion reported in nine months of 2022.
In terms of profit, Zenith Bank outshined other companies, posted N505.0 4billion profit before tax in nine months of 2023 from N202.55billion in nine months of 2022, followed by United Bank for Africa Plc (UBA) that announced N502.09billion profit in nine months of 2023 from N262.54billion in nine months of 2022.
Meanwhile, though the banking sector topped the performance chart contributing the highest value of both revenue and profit before tax, the sector recorded impressive financial performance for the nine months of 2023 influenced by the growth in non-interest income.
According to THISDAY investigation, the financial results of eight leading banks showed that the combined revenue increased to N6.96 trillion in nine months of 2023, a growth of 93 per cent from N3.61trillion in nine months of 2022.
Out of the N13.94 trillion revenue, the eight banks contributed about 49.9per cent.
The other eight banks including Guaranty Trust Holdings Plc, FBN Holdings Plc, FCMB Group Plc, Fidelity Bank Plc, Sterling Holdings declared N2.2trillion profit before tax in nine months of 2023, representing 159.99 per cent increase from N841.97billion reported in nine months of 2022.
Meanwhile, analysts have stated that the mixed nine months of 2023 performance was attributable to a combination of factors such as revaluation gain and earnings from interest income from lending to customers.
They further noted that tier-2 banks were relatively better in terms of profit and revenue generation, especially FCMB group Plc and Fidelity Bank, an indication that tier-2 banks are navigating the challenges of macroeconomic environment more efficiently.
However, the likes of Dangote Cement, BUA Cement Plc, Lafarge Africa Plc were faced with cost of operation due to double-digit inflation and foreign exchange policy of the CBN.
Specifically, the three combined companies generated N2.14trillion revenue in nine months of 2023, an increase of 25 per cent from N1.7 1trillion in nine months of 2022, while profit before tax stood at N551.79billion in nine months of 2023 from N478.66 billion in nine months of 2022.
Dangote Cement came third behind MTN Nigeria Communication and Access Holdings Plc in revenue generation, declaring N1.51trillion revenue in nine months of 2023, an increase of 29 per cent from N1.18trillion reported in nine months of 2022.
The likes of Nigerian Breweries, International Breweries and Dangote Sugar Refinery were most affected with the CBN foreign exchange policy amid growing revenue.
Despite growth revenue to N401.8billion in nine months of 2023 from N3933.45billion, Nigerian Breweries reported N78.16 billion loss in nine months of 2023 from N77.79 billion in nine months of 2023, caused by naira revaluation loss.
Dangote Sugar Refinery posted N41.33billion loss before tax in nine months of 2023 from N36.27 billion profit before tax declared in the corresponding period of 2022.
In addition, International Breweries also declared N43.552billion loss in nine months of 2023 from N2.85billion loss before tax reported in nine months of 2023.
Reacting, analyst and CEO, Wyoming Capital & Partners, Mr. Tajudeen Olayinka said: “The performance of nine months of 2023 results is mixed while some have very good results, especially the banking sector, others were faced with CBN naira revaluation policy that impacted their bottom-line. 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 increased staff salaries.”
On banks performance, he said: “Tier-1 Banks have especially Zenith Bank, Access Holdings GTCO, UBA, and FBN have benefited from the CBN foreign exchange policy.”
On his part, Analyst and Managing Director, High Cap Securities Limited, David Adonri said: “Nigeria’s economy is revering from post-election spending and we have witnessed some challenges including hike in inflation, security, among other factors that have continued to have mixed reactions on revenue generation. Nigerian banks have benefited from the CBN policy and an impressive dividend is expected by 2023 full financial year. Some companies negative growth returns, in comparison to the hyperinflation bedeviling the economy, are fallout of the general weakness of the nation’s socioeconomic fundamentals.”
Commenting on tier-2 performance, Adonri said: “Tier 2 banks may have assumed more risks in deployment of their assets in nine months of 2023 thus, heightening the general cost of their administration. They grew during the period but at the expense of profitability.”
Reacting as well, analyst and Chief Operating Officer of InvestData Consulting Limited, Mr. Ambrose Omordion said: “Year on year “(YoY) performance of listed companies will always be mixed in the sense that all companies cannot continue to report impressive numbers as there will be periods where policies and the economic situation will be favourable to some and unfavourable to the others.”
Continuing, he said: “In my view on the banking sector most of them reported significant gains from their non-interest income despite challenges. The industrial sector was already coming from a low base due to the lower level of activity reported for first quater of 2023 due to the tension towards the 2023 general elections.
“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. The market expects this positive trend to be sustained in the fourth quarter barring unforeseen circumstances. However, OPEX (Operating expenditure) is expected to rise due to higher cost of doing business.”