According to the nine-month (9M) results for 2024, the increased demand for their products, improved cost control, and high prices caused 10 of the 13 listed businesses on the Nigerian Exchange Limited to achieve an 80% year-over-year rise in income.
Nigeria is struggling with a number of economic issues, such as ongoing inflationary pressures, depreciating currency, and rising operating expenses for indigenous companies.
Amidst government endeavors to stabilize the naira and manage inflation, the consumer price index of Africa’s fourth largest economy surged to 32.70 percent in September due to an increase in petrol prices. This marked a dramatic reversal from the two-month decline that had previously occurred, thereby reducing the purchasing power of consumers.
The benchmark interest rate increased from 26.75 percent in July 2024 to 27.25 percent in September after the Central Bank of Nigeria (CBN) recently increased its Monetary Policy Rate (MPR) by 50 basis points. This year’s rate raise was the fifth in a row.
Companies such as United Capital Plc, Unilever Nigeria Plc, Champion Breweries Plc, United Bank of Africa (UBA), Transcorp Hotels, Transcorp Power Plc, Ikeja Hotel Plc, Stanbic IBTC Holding Plc, Dangote Cement Plc, and Geregu Power Plc managed to generate profits after all costs were subtracted despite these challenges.
The company’s combined after-tax profit increased to N1.1 trillion in nine months, a 79.9 percent increase from N884 billion in the same period of 2023, according to TNC’s study of the company’s financial documents.
The largest profit, N525.3 billion, was reported by UBA, followed by Dangote Cement (N279.1 billion from N277.5 billion), Stanbic IBTC Holding (N182.8 billion from N109.2 billion), Transcorp Power (N58.4 billion), Geregu Power (N24.1 billion), United Capital (N15.9 billion), Unilever (N11 billion), Transcorp hotels (N10.2 billion), Ikeja Hotel (N2 million), and Champion Brewery (N21 million) after suffering a N77 million loss.
However, Nigerian Breweries recorded a loss of N149 billion from N57.1 billion, while UPDC Plc, Japaul Gold, and Ventures Plc reported a fall in profits of N396 million and N578 million, respectively.
According to research analyst Israel Odubola, a number of variables, including improved cost control, increased production volume, and greater pricing, have contributed to the listed companies’ increased profits.
“Banks typically have strong net foreign currency assets, which is good for the bottom line, and they have demonstrated resilience for a long time despite economic challenges,” he said.
The cement industry is an example of an oligopoly. Profitability will undoubtedly result from increased production volume and/or price. Nonetheless, tactics implemented to reduce operational expenses might be credited with the rise in profits of other businesses in various industries.
According to the CBN PMI survey, business activity in September was 50.5 points across three major sectors: industry, services, and agriculture. This was the second consecutive month that the economy was expanding. This comes after a 13-month contraction that lasted until July 2024, it added.
Analysis of individual firms:
UBA
UBA reported a profit after tax of N525.3 billion, up 16.9% from N449.3 billion, with a profit before tax of N603.4 billion, a 20.1% increase from N502.1 billion. Earnings per share rose to N14.78 from N12.93, and cash and cash equivalents surged to N5.85 trillion from N1.98 trillion.
As a leading pan-African financial institution, UBA serves over 37 million customers across 1,000 offices in 20 African countries. With offices in New York, London, Paris, and the UAE, UBA offers retail, commercial, and corporate banking, as well as cross-border payments, trade finance, and remittance services across Africa.
Dangote Cement
The largest cement manufacturer in Africa, Dangote Cement, saw an increase in its after-tax earnings from N277.5 billion to N279.1 billion during the same time in 2023. With the help of high prices, the company’s revenue increased from N1.5 trillion to N2.5 trillion.
Its finance income increased from N20 billion to N29 billion during the analysed periods, while its finance costs increased from N190 billion to N451 billion. The company’s earnings per share increased from N16.08 to N16.55.
Stanbic IBTC
After-tax earnings for Stanbic IBTC was N182.8 billion, up from N109.2 billion during the same time in 2023. The basic and diluted earnings per share of the holding firm were N1,390, up from N825 during the same period in 2023.
The amount of its cash and cash equivalents increased from N837 billion to N1.9 trillion.This is a key player in Nigeria’s financial system, having a strong organisational structure and a core role as a financial holding company.
Geregu Power
The after-tax profit for Geregu Power increased from N11.3 billion to N24.1 billion during the same period in 2023. With the help of energy sales, the company’s revenue increased from N55.7 billion to N112.5 billion.
Its finance income increased from N6.08 billion to N6.5 billion throughout the analysed years, while its finance costs decreased from N8.4 billion to N7.3 billion. The company’s earnings per share increased from N4.54 to N9.68.
United Capital
During the time, United Capital Plc, an investment company, saw an increase in its after-tax profit from N8.4 billion to N15.9 billion. In the same time of 2023, the company’s gross earnings increased from N17.5 billion to N28.1 billion, a 60.5 percent increase. Trading revenue increased to N3.4 billion, a 161% increase.
Its operational expenses increased by 60.4% to N7.7 billion during the examined period, while its operating profits increased from N16 billion to N22.3 billion.
Unilever Nigeria
The after-tax profit of fast-moving consumer goods company Unilever Nigeria increased from N7.5 billion to N11 billion during the period under review.
From N71.2 billion to N103.8 billion, the company’s revenue increased. Its finance income increased from N5.3 billion to N6.7 billion throughout the analysed years, and its finance costs increased from N2.5 billion to N2.9 billion. The company’s earnings per share increased from N1.30 to N1.92 kobo.
Unilever’s managing director, Tim Kleinebenne, stated: “The consistency in our quarter-on-quarter sustained growth and performance remains a testament that with our Growth Action Plan (GAP), we are committed to serving consumers with our best brands to meet their daily needs of improved health and hygiene. Unilever Nigeria is pleased with its performance progress riding on the pillars of operational efficiency, cost optimization, purposeful brands, and increasing market share across key categories.”
Transcorp Power
Nigerian electricity producer Transcorp Electricity recorded an after-tax profit of N58 billion in 2023, up from N20.4 billion the previous year. During the investigated periods, its income increased from N88.4 billion to N223.5 billion.
While income tax climbed from N7.9 billion to N22.7 billion in 2023, the company’s finance costs went from N5.9 million to N7.9 billion in 9M. During the same period in 2023, earnings per share dropped from N258 to N7.79.
Ikeja Hotel
Ikeja Hotel, a hotel development and management company, saw a rise in its after-tax earnings from N587,353 to N2 million during the same time. The company’s sales expenses increased to N7.8 million, accounting for 60% of its total revenue.
In the nine months leading up to September 2024, the company’s financing costs increased to N878,831, and its income tax increased from N482,652 to N1.08 million. During the same period in 2023, earnings per share increased from N28 to N93.
Transcorp Hotel
During the years, the hotel company Transcorp Hotel’s after-tax profit grew from N4.1 billion to N10.2 billion. The company’s cost of sales increased to N14 billion, accounting for 28% of its total revenue.
While income tax increased from N1.4 billion to N6.1 billion, the company’s financing costs decreased from N2.95 billion to N2.9 million in 9M. During the same period in 2023, earnings per share increased from N40 to N100.
