Nigeria: Despite Domestic, Global Challenges, 40 NGX Listed Companies Reports Record N6.78trn Revenue

Despite domestic and global macroeconomic challenges, a total of 40 companies listed on the Nigerian Exchange Limited (NGX) announced combined revenue of N6.78 trillion in the half year ended June 30, 2022.

The combined revenue in H1 2022 is 26 per cent higher than the N5.4 trillion recorded in the same period in H1 2021.

Also, the 40 companies in the period under review posted 26.3 per cent increase in profit before tax to N1.55 trillion as against N1.23 trillion in H1 2021.

The 40 companies had contributed to 3.54 per cent growth in Gross Domestic Product (GDP) in second quarter (Q2 2022) from the 3.11 per cent growth it recorded in Q1 2021 on the backdrop of low consumer’s purchasing power, double-digit inflate rate, unstable foreign exchange, hike in operating expenses and severe competition.

The 40 companies comprise of: 12 banks, six petroleum marketing/ Fast-moving Consumer Goods (FCMG) companies each, three cement/ breweries manufacturing companies, four health companies, one telecommunication company, among others.

According to THISDAY findings, MTN Nigeria Communications Plc, followed by Dangote Cement Plc, Ecobank Transnational Incorporated (ETI) and Nigerian Breweries Plc recorded highest revenue during the period.

MTN Nigeria Communications reported 20.07 per cent increase in revenue to N950.09billion in H1 2022 from N791.26billion in H1 2021, while Dangote Cement reported N808.04billion revenue in H1 2022, representing an increase of 17 per cent from N690.55billion in H1 2021

MTN Nigeria also leads in profit before tax in the period under review, reporting N268.64 billion profit in H1 2022 from N215.12billion in H1 2021, it was closely followed by Dangote Cement with N264.89billion profit before tax in the period under review from N281.25 billion reported in the corresponding period.

Although the banking sector contributed 31.13 per cent or N2.55 trillion to the N6.8 trillion revenue recorded in H1 2022, ETI topped the performance chart in revenue generation.

ETI in the period grew revenue to N503.6billion in H1 2022, representing an increase of 15 per cent from N439.49billion in H1 2021, followed by Zenith bank that reported N404.76billion in revenue from N345.6billion in H1 2021.

The six petroleummarketing companies reported N605.89billion revenue in H1 2022 from N415.16billion in H1 2021, while profit before tax grew significantly by 151.43 per cent to N103.56billion in H1 2022 from N41.2billion reported in H1 2021.

Petroleum marketing companies benefited from the increase in the price of Premium Motor Spirit (PMS), and Automotive Gasoline/grease Oil (AGO) also called diesel.

Analysts at Vetiva Research in a report titled, “Nigeria H2’22 Outlook: A Strange Labyrinth,” said, “Our demand outlook suggests that we will continue to see increased oil consumption on the back of improved industrial and domestic activities, although there are some setbacks to the global macro environment that may dent economic output, slow down growth, and in turn affect oil demand.

“For more specifics, the IMF had earlier projected the world economy to grow by 4.9 per cent y/y, but with global inflation on the rise and increasing geo-political tensions in various parts of the world, global economic growth has now been revised downwards to 3.6per cent y/y.

“This slowdown in world output should typically affect oil-demand, however, the overall effect is expected to be minimal, and oil demand is anticipated to remain strong throughout the year.”

Analysts expressed that the revenue increase by listed companies showed a steady increase in macroeconomic activities, stressing that some companies are still recovering from the COVID-19 pandemic.

The Managing Director, High Cap Securities Limited, David Adonri, said, “Nigeria economy still recovering from the Covid-19 pandemic and we witnessed further disruption in the global economy due to the ongoing Russia/Ukraine war.

“Apparently, Tier-1 banks benefited from the hike in interest rate in H1 2022 hence, improving gross earnings and impacting on profit. The banks were able to increase profits through stern cost reduction measures.

“Their negative growth returns, in comparison to the hyperinflation bedeviling the economy, are fallout of the general weakness of the nation’s socioeconomic fundamentals.

“The industrial sector was already coming from a low base due to the lower level of activity reported for H1 2020 due to the lock down.

“Hence it was possible for most of them to report higher profits for the period. Though, market activity remains weak on the NGX, as investors will continue to be attracted to improved performance just as is being experienced in the upside in the price of companies that have reported higher profits and increased interim dividend.”

On banks, performance, he said: “Tier 1 banks, Zenith, First Bank Nigeria Holdings, among others have significant increase in profit after tax but GTCO have fallen below expectations.

“Meanwhile, Tier – 2 are relatively better in terms of profit especially by Fidelity Bank and Sterling Bank while Stanbic IBTC outshine H1 2021 performance in PBT better than the previous year. It shows that Tier- 2 is catching up with the challenge and hope to meet expectations.”

Reacting, analysts and Chief Operating Officer at InvestData Consulting Limited, Mr Ambrose Omordion said: “Financial performance of the banks in H1 2022 has been mixed with more positive outings by the Tier-1 banks that control almost 60 per cent of business activities in the economy.

“OPEX (Operating expenditure) was higher due hike in the cost of doing business. The operators expect an adjustment in foreign exchange to be positive for most of the Tier-1 banks which is likely before the end of the year.”

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