The Nation Newspaper

Category: Equities

  • UBA opts for early redemption of seven-year N20b bond

    UBA opts for early redemption of seven-year N20b bond

    The board of directors of United Bank for Africa (UBA) Plc has decided to exercise the call option for the early redemption of the bank’s seven-year N20 billion bond, issued in October 2010. The bond has a tenor of seven years with 13 per cent fixed rate coupon. The tenor of the bond ordinarily ends in 2017.

    The bank’s directors said they would be exercising their rights to redeem the bond earlier than its full redemption period.

    Under the terms and conditions of the Trust Deed, UBA reserves the rights to early redemption from the fifth year anniversary of the bond, being September 2015.

    The board assured that the bank has adequate liquidity to meet the proposed early redemption, noting that the exercise of this call option has relatively no impact on the liquidity and capital of the bank.

    A new helmsman, Mr. Kennedy Uzoka, last Monday took over as the substantive group managing director at the UBA. The Tony Elumelu-led board of UBA had in March 2016 announced the appointment of Uzoka, a former group deputy managing director, subject to the approval of the apex bank.

    Uzoka has most recently been leading the transformation agenda of the bank, after returning from completing the Advanced Management Programme of Harvard Business School. Uzoka has over two and half decades of experience in commercial banking, strategy and business transformation.

    Prior to his sabbatical at Harvard, Uzoka served as Deputy Managing Director, UBA group and was also the CEO of UBA Africa, responsible for the Group’s operations in 18 countries across Africa. The new GMD is a graduate of Mechanical Engineering from University of Benin and holds a Masters Degree in Business Administration from University of Lagos.

    The new GMD had already given a glimpse of the underlying vision and strategies of his leadership at the first generation bank.

    Uzoka has said the bank under him will remain committed to sustainably delivering superior returns to shareholders in excess of their expectations.

    He outlined that the bank’s African subsidiaries are growing stronger and the group has a target to increase Africa’s contribution to the group’s profit to over 25 per cent in 2016 from 24 per cent in 2015.

  • May & Baker Nigeria sustains steady growth in first half

    May & Baker Nigeria Plc rode against the industry and macroeconomic headwinds to sustain appreciable growth in its performance in the first half of this year as the healthcare group continued to benefit from improving cost and operating efficiencies.

    Against the general decline in revenue and profitability by most companies that have released their earnings reports, key extracts of the interim report and accounts of May & Baker Nigeria for the six-month period ended June 30, 2016 showed that turnover rose by nine per cent.  The group results showed that turnover rose to N3.70 billion in first half of 2016 compared with N3.41 billion in first half 2015.

    The company sustained growth in pre and post-tax profits.  It reduced its finance cost and distribution, sales and marketing expenses by 10 per cent and 12 per cent respectively. However, cost of sales grew by 16 per cent  from N2.25 billion to N2.60 billion due to increases in materials’ costs, devaluation of the Naira and high power cost driven by rampant gas outages. This affected gross profit, which reduced from N1.16 billion in first half 2015 to N1.1 billion in first half 2016.

    Nigeria’s inflation rate has risen consistently to 16.5 per cent while the devaluation of Naira from N199 to a dollar had pushed the exchange rate above N300 per dollar.

    The company continued to benefit from management’s focus on overall operational efficiency. While administrative expenses rose on the back of the jumpy inflation from N263.45 million to N309.48 million, distribution, sales and marketing expenses dropped by 12.4 per cent from N583.20 million to N510.84 million. With these, total operating expenses declined to N820.31 million in first half 2016 as against N846.65 million in first half 2015. Finance costs reduced from N284.38 million to N255.80 million.

    With these, profit before tax rose to N44.25 million in first half of 2016, against N43.73 million recorded in comparable period of 2015. Profit after tax also increased from N29.73 million to N30.09 million. Earnings per share thus improved from 3.03 kobo in first half 2015 to 3.07 kobo in first half 2016.

    This commendable first-half performance has raised the prospects of good returns in the ongoing business year. The company had increased total dividend payout by 20 per cent to N58.8 million, for the 2015 business year compared to what it paid for 2014 business year.

    Managing Director, May & Baker Nigeria Plc, Mr. Nnamdi Okafor, had told shareholders at the 2016 Annual General Meeting (AGM) that management would remain focused on improving the performance of the company in spite of the challenges in the macro economy.  He assured that the company will remain focused on its long-term goal of building a virile and diversified business that can ensure good competitive long-term returns to the shareholders.

    The increase in sales and bottom-line shows the resilience of the underlying fundamentals of the company and the success of ongoing management’s initiatives aimed at optimising the synergies from its recent investments.

    Also, reviewing the outlook for the company recently, chairman, May & Baker Nigeria Plc, Lt. Gen. Theophilus Danjuma (rtd), told shareholders that the company was set to break new grounds and enhance the value of their investments.

    He said May & Baker Nigeria plans to expand into new business areas as it seeks new opportunities that will add value to its performance while sustaining the growth of existing businesses and investments.

  • N40b capital issue: Flour Mills mulls rights, debt

    N40b capital issue: Flour Mills mulls rights, debt

    Flour Mills of Nigeria Plc is considering selling new ordinary shares to existing shareholders and issuance of new debt securities to raise some N40 billion as part of efforts to bolster the capital base of the country and cushion the adverse impact of Naira devaluation on its balance sheet.

    Flour Mills’ share price rose by N1.98 to close at N21.98 at the weekend at the Nigerian Stock Exchange (NSE). It has traded within a high of N34.05 and a low of N15.93 in the past 12 months.

    While details of the new issues remain sketchy at the weekend, chief financial officer, Flour Mills of Nigeria Plc, Jacque Vauthier, confirmed that the flour-milling company has already secured the approval of the Securities and Exchange Commission (SEC) to raise some N40 billion in new equity funds over the next three years.

    During analysts’ conference on the full-year results of the company, Vauthier said the company had opted for a shelf plan for the new fund raising, which allows the company to raise the fund in many tranches as it deems fit.

    He said the market condition at the stock market would determine the timeline for the commencement of the issuance.

    He said the company was considering several options to include equity issue, short-term debt issue and refinancing to manage its leverage and ensure that its balance sheet supports the growth and profitability of the company.

    According to him, Flour Mills will use the net proceeds from the new issues to reduce its debt and bolster working capital.

    It should be noted that shareholders had earlier approved the planned new issue at the 2015 annual general meeting, but the decline at the Nigerian capital market had frustrated several proposed new issues.

    Flour Mills had sold its stake in the United Cement Company of Nigeria (Unicem) to the Lafarge Africa Group as it restructured its businesses to focus on the food industry.

    The group had restructured and increased investment in its sugar company, which led to successful commissioning of a 750,000 metric tons per annual sugar refinery built at a cost of $250 million in April 2013. In furtherance of the its long term business model and growth strategy, Flour Mills had embarked on group restructuring, strategic business acquisitions and investment in its core food business and backward integration programmes.

    Flour Mills had invested in large scale commercial farming to support its food processing units with locally produced raw materials. It had invested about N41 billion in capital projects including key projects such as flour capacity expansion in its Apapa mills, completion of Golden Snacks facility in Agbara, completion of Golden Sugar Refinery, establishment of new flour mill in Calabar, expansion of pasta & noodles lines and many major agro allied projects such as investments in Sunti Golden Sugar Estates and new animal feed mill and acquisition and development of large scale commercial farming.

  • ‘Nigeria’s inflation rate may hit 17.35%’

    The National Bureau of Statistics (NBS) is expected to announce the sixth consecutive spike in inflation rate next week, according to analysts at FSDH Merchant Bank.

    In a preview of the inflation report expected to be released on August 18, 2016, analysts at FSDH Merchant Bank said year-on-year inflation rate could rise to 17.35 per cent for the month of July, from 16.48 per cent recorded for the month of June 2016.

    According to analysts, the expected increase will come from the increase in the prices of food items and other non-food items as a result of the depreciation in the value of the naira.

    “Our analysis indicates that the value of the naira depreciated at the inter-bank market and the parallel market by 11.89 per cent and 6.63 per cent respectively in July 2016. The Naira lost N38.19 and N25.00 at the inter-bank and parallel market to close at $/N321.16 and $377 respectively as at the end of July. The depreciation recorded in the exchange rate between the two months would put further pressure on domestic prices,” FSDH Merchant Bank stated in a preview obtained at the weekend.

    Analysts said the prices of food items monitored in July 2016 increased compared with June 2016 with prices of yam, onions, sweet potatoes, palm oil, vegetable oil, garri, Irish potatoes, rice and fish rising by 28.7 per cent, 17.78 per cent, 10 per cent, 8.89 per cent, 7.94 per cent, 5.56 per cent,  4.55 per cent, 3.7 per cent and 1.85 per cent respectively. The price of tomatoes, however, fell by 27.34 per cent while the price of beans remained unchanged.

    “Our model indicates that the price movements in the consumer goods and services in July 2016 would increase the CCPI to 204.61 points, representing a month-on-month increase of 1.45 per cent. We estimate that the increase in the CCPI in July will produce an inflation rate of 17.35 per cent,” FSDH stated.

  • Why EFCC is investigating us, by Aviation handling firm

    Why EFCC is investigating us, by Aviation handling firm

    The management of Nigerian Aviation Handling Company (Nahco) Plc at the weekend explained the reason for the visit of officials of Economic and Financial Crimes Commission (EFCC) to the company.

    The management of the company said the EFCC was investigating a petition against the company. Operatives of the EFCC had last week stormed the headquarters of Nahco and subsequently invited some top managers and directors of the company for questioning at the agency’s office.

    Nahco said it cooperated with the operatives of the commission, insisting that the visit of the EFCC operatives and the invitation of top managers and some directors to the EFCC’s office have minimal impact on operations and business continuity.

    “Nahco wishes to assure its numerous customers, shareholders and its European Union strategic investors that core operations of the company will be sustained under the current difficult situation. The Managing Director, who was on a short vacation, has since cut short his vacation and is back at the helm of affairs at the company. Management will provide updates as and when available,” Nahco said.

    The management of the ground handling and logistics company noted that as a publicly quoted company, Nahco is guided by the guidelines set by capital market regulators and it is also aware of its shareholders’ rights as enshrined in the constitution of Nigeria, extant  rules and the mutual investment protection treaty covering European strategic investors on its board.

  • Equities rebound with N22b gain

    After five consecutive negative trading sessions, Nigerian equities broke away from the losing streak as highly capitalised stocks rallied the stock market to a net capital gain of N22 billion. The benchmark index at the Nigerian Stock Exchange (NSE) inched up by 0.23 per cent, underlining the gains made by large-cap stocks in the oil and gas and consumer goods sectors.

    Aggregate market value of all quoted equities rose to N9.531 trillion from its opening value of N9.509 trillion. The All Share Index (ASI), the benchmark index for the Nigerian stock market, also rose simultaneously from 27,687.80 points to close at 27,751.34 points.

    With 17 losers to 14 gainers, the positive overall market position was driven largely by the gains recorded by large-cap downstream oil companies, breweries and cement companies. These reflected on the performance of the sectoral indices. The NSE Oil & Gas Index rose by 1.4 per cent. The NSE Consumer Goods Index rallied 0.8 per cent while the NSE Industrial Goods Index appreciated by 0.4 per cent. However, the NSE Banking Index declined by 0.6 per cent while the NSE Insurance Index depreciated by 0.4 per cent.

    The average year-to-date return improved marginally, though still negative, to -3.11 per cent.

    Total Nigeria led the rebound with a gain of N16.60 to close at N222.60. Mobil Oil Nigeria followed with a gain of N8.10 to close at N170.10. Nigerian Breweries chalked up N2.45 to close at N135. Guinness Nigeria gathered N1.01 to close at N95 while Lafarge Africa added 60 kobo to close at N51.60 per share.

    Total turnover stood below recent average with the exchange of 155.77 million shares valued at N1.53 billion in 3,320 deals. Banking stocks dominated the activities chart. FBN Holdings led the chart with a turnover of 30.75 million shares worth N101.85 million. Fidelity Bank followed with a turnover of 23.12 million shares worth N24.47 million while Guaranty Trust Bank placed third with a turnover of 14.15 million shares valued at N340.59 million.

    On the negative side, International Breweries led the losers with a loss of 96 kobo to close at N18.38. Flour Mills of Nigeria dropped by 43 kobo to close at N20. Forte Oil lost 40 kobo to close at N166.82. Guaranty Trust Bank and Union Bank of Nigeria declined by 18 kobo each to close at N23.88 and N4 respectively while Zenith Bank lost 10 kobo to close at N16.35 per share.

  • Dangote Cement outlines plan for profit growth

    Dangote Cement outlines plan for profit growth

    Dangote Cement Plc would shift to coal as a stable energy source, increase the group’s production capacities with the opening of new cement plants and enhance its domestic and international supply as part of a multi-prong approach to improve its performance in the period ahead.

    At the presentation of the underlying facts on the operations of the cement group yesterday at the Nigerian Stock Exchange (NSE), chief executive officer, Dangote Cement Plc, Onne Van der Weijde, outlined the strategic initiatives being taken to improve the profitability of the cement group.

    He spoke against the background of the half-year results of the group for the period ended June 30, 2016. Key extracts of the group results showed that turnover rose to N292.19 billion in first half 2016 as against N242.22 billion recorded in comparable period of 2015. Profit before tax however dropped to N124.89 billion in first half 2016 as against N128.73 billion recorded in comparable period of 2015. After taxes, net profit declined from N121.81 billion to N103.42 billion.

    Van der Weijde said the cement group would start 100 per cent coal production in September 2016 in an attempt to overcome the shortage of gas supply and reduce the challenge of foreign exchange (forex).

    According to him, the company had decided three years ago to diversify and de-risk fuel supplies by opting for coal mills as energy sources, with the coal mills now ready for operation by end of September 2016.

    He said switching to coal would improve margins compared with Low Pour Fuel Oil, improve fuel security, eliminate shutdown as 100 per cent coal use will be possible across all lines and reduce forex need for imported fuel.

    He added that the some of the company’s plant in Obajana in Kogi State and Ibese in Ogun State have already started using locally purchased coal blended with imported coal to assure optimal quality for their operations.

    “We will begin mining our own coal at Ankpa in Kogi State in fourth quarter,” Van der Weijde said.

    He noted that klin fuel is the major cost of cement production, pointing out that the group margins are affected by the inefficiencies in the fuel mix.

    He assured that in the second half, the group expects strong volume growth with Ghana likely to import more cement from Nigeria while simultaneously focusing on protection of margins in Nigeria with more coal facilities in Nigeria coming on stream and increased exports to ECOWAS countries.

    He said the groups’ Congo plant is set for operation in October 2016 while the Sierra Leone plant is expected to ready by October 2016.

    Chief executive officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema commended Dangote Cement as a dominant player in the industrial goods sector, noting that the cement group has continued to solidify itself as an innovative brand in this sector.

  • Equities in tight trade as investors weigh outlook

    Quoted equities narrowed down the losing streak at the stock market as investors weighed half-year earnings against the prospective performance and return in the second half. After losing N57 billion on Monday, equities narrowed losses to N4 billion on Tuesday as highly capitalised stocks rallied on the back of bargain-hunting.

    Aggregate market value of all quoted equities at the Nigerian Stock Exchange (NSE) dropped from N9.563 trillion to close at N9.559 trillion. The All Share Index (ASI), the main index that tracks prices at the Exchange, declined from 27,843.00 points to close at 27,831.95 points.

    With 26 decliners to 17 advancers, the average year-to-date return at the stock market worsened to -2.83 per cent. Sectoral indices showed widespread losses across the sectors. The NSE Oil & Gas Index declined by 1.9 per cent. The Insurance Index lost 1.3 per cent. The NSE Industrial Goods Index dropped by 1.0 per cent. The NSE Consumer Goods Index declined by 0.9 per cent while the NSE Banking Index slipped by 0.1 per cent.

    Nestle Nigeria led the losers with a loss of N21.30 to close at N816.20. Seplat Petroleum Development Company followed with a loss of N14.89 to close at N282.94. Forte Oil lost N7.80 to close at N167. Lafarge Africa declined by N2.79 to close at N53.07 while Nigerian Breweries dropped by 87 kobo to close at N133.13 per share.

    On the other hand, Dangote Cement led the gainers with a gain of N3 to close at N183. Guinness Nigeria rose by N1 to close at N94. PZ Cussons Nigeria added 85 kobo to close at N18.45. Oando rose by 51 kobo to close at N5.58 while Cadbury Nigeria gathered 34 kobo to close at N13.90 per share.

    Total turnover stood at 275.74 million shares valued at N3.15 billion in 4,126 deals. The three most active stocks were Zenith Bank with 46.79 million shares valued at N788.23 million; Transnational Corporation of Nigeria recorded 37.29 million shares worth N43.05 million while Fidelity Bank placed third with 26.18 million shares valued at N28.65 million.

    “With no major trigger to stoke investor confidence in the interim, we believe that downtrend in the market will likely continue. Nevertheless, we do not rule out the prospect of some bargain hunting in the trading days ahead,” Afrinvest Securities stated.

  • Oando grows turnover by 18% to N212b in H1

    Oando Plc grew its top-line by about 18 per cent to N212 billion in the first half of this year as the energy group continued efforts to deleverage its balance sheet and extract greater value from its high-margin businesses.

    Interim report and accounts of Oando for the six-month period ended June 30, 2016 released yesterday at the Nigerian Stock Exchange (NSE) showed that group turnover rose by 17.8 per cent to N212 billion in first half 2016 as against N180 billion recorded in the comparable period of 2015. Gross profit however decreased by 49 per cent to N19 billion compared with N37.1 billion recorded in the corresponding period of 2015. Loss after tax however decreased by 23 per cent to N27 billion in first half 2016 as against N35.0 billion in comparable period of 2015.

    The bottom-line performance came against the background of the effects of the global slump in oil prices which has seen Nigeria’s oil export receipts decline dramatically, indigenous firms face a scale back in proposed Joint Ventures with IOCs, deeper cuts to capital spending, finding new markets and investor wariness.

    Oando’s bottom-line was impacted by a 25 per cent reduction in daily production volumes from 56 kboepd in first half 2015 to 45 kboepd in first half 2016, as a result of production disruption from militants’ activities in the Niger Delta. Also, the devaluation of the Naira by the Central Bank of Nigeria in second quarter 2016, from an average exchange rate of N199 per dollar to N280 per dollar, resulting in unrealized foreign exchange losses due to the company’s dollar denominated liabilities.

    Group chief executive, Oando Plc, Mr. Wale Tinubu, noted that the first half of the year has revealed how challenging the oil and gas environment was in Nigeria with disruptions from militancy.

    He said the group however benefitted from the implementation of the oil price hedge, which has helped it to calm the effects of the disruption of production activities, adding that now that the dollar liquidity position in the country has improved, the group has converted 60 per cent of its dollar denominated obligations to Naira, while restructuring its debt through the N108 Billion medium term note, thus managing any future currency volatility.

    “We reiterate our forward looking business model of a focused upstream and export trading businesses, which will drive profitability through consistent dollar earnings,” Tinubu said.

    According to him, as part of plans to return the company to profitability by year-end 2016, Oando is in the concluding phase of its five-pronged strategic group initiatives, 67 per cent of its non-producing asset disposals and 50 per cent of refinancing target have been concluded.

    He pointed out that in the first half the company successfully restructured its debt through a N108 billion Medium Term Note with lower capital costs circa 15 per cent and a renewed five year tenor in the first quarter of 2016 as well as the full divestment of its upstream services business, reducing the group’s debt profile by 32 per cent.

    He said that Oando had in July 2016 successfully concluded recapitalization of its downstream business for $210 million, the net cash proceeds of the transaction have been used to further reduce a significant portion of the debt on the group’s balance sheet.

  • Airtel considers listing on Stock Exchange

    Airtel considers listing on Stock Exchange

    Airtel Networks Limited, Nigeria’s second largest telecommunication company, may consider listing its shares on the Nigerian Stock Exchange (NSE) as it considers various options to further upscale its business.

    Its Managing Director, Mr. Segun Ogunsanya, yesterday said the company was looking at every option, including listing of its shares on the NSE and would take appropriate decision at the right time.

    Ogunsanya, who was one of the speakers at the 2nd edition of the CEO Roundtable, organised by the NSE and Bloomberg at the Stock Exchange House, Lagos, had a brief discussion with NSE Chief Executive Officer, Mr. Oscar Onyema, on the prospects of listing during the pre-event session.

    “We are not against listing on the NSE,” Ogunsanya said, urging the government to leverage on the information and communication technology (ICT) potential of the country to drive inclusive economic growth.

    According to him, the government should consider digitisation of Nigeria as a viable option for growth by creating affordable access to broadband to Nigerians.

    MTN Nigeria, Nigeria’s largest telecommunication company, has already appointed the advisory team and set out a roadmap towards listing on the NSE in 2017.

    The listing of MTN and Airtel is expected to enliven the telecommunication sector of the NSE. Previously listed telecommunication companies had failed to connect the much-talked about potential of the industry with investors’ returns. Starcomms was delisted after long-running losses.

    The board of MTN Nigeria had announced the appointment of  Stanbic IBTC Capital Limited and its affiliates, Standard Bank of South Africa Limited and Standard Advisory Limited London  and Citigroup Global Markets Limited as the joint transaction advisors and joint global coordinators for the proposed listing of MTN Nigeria on the NSE.

    Stanbic IBTC would serve as the lead issuing house in a team that would also include Nigerian receiving agents, banks and other advisers, which would be appointed in due course.

    “MTN Nigeria is pleased to announce that its board of directors has resolved to proceed with preparations for a listing of MTN Nigeria on The NSE as soon as commercially and legally possible and has established a management task team with the responsibility to guide the company towards a listing. At present, MTN Nigeria is targeting that the listing takes place during 2017, subject to suitable market conditions,” the company stated.

    It should be recalled that as part of the conditions to settle its $3.4 billion fine by the Nigerian Communications Commission (NCC), MTN Nigeria had announced its intention to list its shares on the NSE as soon as commercially and legally possible.