The Nation Newspaper

Tag: outlook

  • Local brand, global outlook

    Local brand, global outlook

    • In 16 countries and counting, Dangote Industries morphs into a great Nigerian multinational

    About a decade ago, Dangote Group was a large trading concern dealing in an assortment of commodities.

    Yes, it was a monopolistic shark exerting commanding control in its areas of business like rice, sugar, cement and whatever else it set its mind to import. It also enjoyed some sweetheart deals and waivers from a series of Nigerian governments.

    But all these will not detract a nit bit from the Midas of Aliko Dangote and his rampaging ambition to rule the world of commerce and industry.

    In 2006, Dangote decided to transform his huge trading outfit into a real sector business and in just nine years, Dangote Industries has become the largest manufacturing conglomerate in Africa with strong presence in 16 African countries.

    Just last week, the company opened its $600 million, 3.0 metric tonnes cement plant in Tanzania. This plant is reputed to be the largest in East and Central Africa.  It is also reported to be the largest single investment in Tanzania. The investment which comes with a 25-hectare jetty will provide employment to about 7000 people when fully operational.

    Apart from Nigeria, its home country and Tanzania, its most current plant, Dangote has major mining and manufacturing concerns in Cameroun, Zambia, South Africa, Congo Brazzavile, Ethiopia, Sierra Leone, Ivory Coast, Liberia, Senegal and Ghana.  According to reports, the firm is said to have already awarded contracts worth $4.34 billion for the construction of 11 new cement plants – ten in Africa and one in Nepal, Asia.

    The industrialist, who is also recorded as Africa’s richest man, considers cement production as strategic for the growth and development of Africa in a dual-pronged way — cement is most essential for construction while cement manufacturing is a huge source employment creation.

    Though his critics also think that with so much expansion across the continent, it would be expected that cement would be cheaper in his home country, Nigeria, the price of the commodity has nevertheless  reduced drastically in recent times to about N1500 per 50 kg bag (less than 1dollar) from an all-time high of about N3000 about two years ago.

    It is interesting to note that Dangote Industries has made bigger and more impactful investments in some of these African countries than long-established multinational corporations with colonial linkage had made in decades. It has therefore become more imperative that eventually, only Africans can catalyse the development of Africa.

    During the inauguration of the Tanzania plant, Aliko Dangote underscored this point when he noted that, “one of our key strengths lies in our ability to understand the peculiar needs of Africans and how to do business successfully on the continent.  That is why we made Africa the centerpiece of our multi-billion dollars investment. We believe that it is only Africans who can develop Africa. We are also motivated to create an African success story because we believe that entrepreneurship holds the key to the future economic growth of the continent.”

    There is no gainsaying that if Africa could by some alchemy, clone half a dozen more Dangotes, she would have no need to keep looking to the West for grants, aids and development support. He is also a challenge to other African leaders and money men, especially those who ship stolen money and  wealth acquired on African soil into vaults in the West for safe-keeping. Such funds help fuel the growth of already developed economies; when they are not lost entirely.

    The Dangote paradigm is commendable and worthy of emulation. Though many Nigerian banks and telecommunications firms have gone across the borders to the West coast and beyond, Dangote is unique in its sheer size, structure and specialization.

    It is indeed a worthy Nigerian brand gone global and spear-headed by an eminent Nigerian ambassador.

  • University Press cautious about future outlook

    The board of University Press (UP) Plc is cautious but optimistic that the printing and publishing company would surmount industry and macroeconomic challenges to maintain steady profit and returns to shareholders.

    Against the background of the dwindling revenues accruing to governments across the tiers and the activities of pirates, the performance of University Press declined in the immediate past year. Turnover dropped by 29 percent while net profit declined by 42 per cent.

    In a business review and outlook to be presented to shareholders at the annual general meeting on Wednesday, directors of the company however said expected improvement in the national sphere and current strategies being implemented by the company would lead to improved performance and returns to shareholders.

    “We are cautiously positive about the business outlook in 2015 despite the seeming challenges. I have no doubt that the strategies we have put in place after due considerations of our expectations of the market scenarios in the coming year will be adequate to deliver better results,” the board stated in a report signed by chairman, University Press Plc, Dr. Lalekan Are.

    The report decried the unending piracy militating against the printing and publishing industry, noting that piracy constitutes a major threat to the book business in Nigeria.

    According to the board, the battle against piracy can only be won with the support of government and the public, especially the people that patronize the pirated books.

    “It is our hope that the wind of change blowing across the country will touch this area (piracy). Our company and other genuine publishers shall continue to deploy appropriate strategies and resources to save the industry from pirates who have continued to short-change investors, authors, employees and other stakeholders,” the chairman’s report stated.

    Key extracts of the audited report and accounts of University Press for the year ended March 31, 2015 showed that turnover dropped by 29 percent from N2.44 billion in 2014 to N1.73 billion in 2015. Profit before tax declined by 43 percent to N199.2 million in 2015 as against N348.12 billion in 2015. Profit after tax also dropped by 42 percent from N233.93 million to N136.39 million. Total assets dropped marginally by five per cent from N2.97 billion in 2014 to N2.82 billion in 2015. The board said the performance of the company was adversely affected by decline in public sector funding.

    The board of directors meanwhile retained the dividend payout of N150.99 million, the same paid for the 2014 business year. Shareholders would receive a dividend per share of 20 kobo for the year just ended.

    Shareholders are expected to consider and approve the dividend recommendation at the yearly general meeting scheduled for Ibadan, Oyo State this Wednesday.

     

  • Creative hair outlook

    Creative hair outlook

    It can be exciting to enhance your hair with beautiful extensions for versatility and glamour. Adetorera Idowu explores options for brides to be.

    Her nicely toned body, bridal gown, shoes and accessories turned heads as she walked down the aisle. For the bride who smiled all the way, the effect made the day one of the most memorable in her life. Onlookers were equally impressed by her creatively designed hairdo which made her look so grand.

    There are a number of styles to choose from and it is important to go for styles that would look really good on you. For instance, the vintage braid done into fishtail can be divided into two sections where a bun is created at the top and pinned into place for effect.

    The hair can then be twisted into a second bun at the bottom and secured with pins. This kind of braid can be worn loose or tied into a low bun. The most important thing is to be creative with your choice of hairdo. You can also try the funky flick. Here the extensions would be texturised to create a shaggy layered look. The hair can also be blow-dried straight at the back. In addition, the front can be flipped to create an exciting retro look.

    However, if what you desire is a wavy outlook, then you can get the right extension for this and add to your natural hair. The middle of the hair can be exciting when pinned to the back and the sides scrunched and back combed to create volume.

    Alternatively, you can go for a splash of colours. Here you make use of colour extension which would be attached and the hair cut to create a straight fringe to bring out your fine features. The ends would then be tapered into feathery finish and blow-dried straight with silicone added for shine.

  • Investment experts predict tough outlook for Q2

    Investment pundits expect the stock market to witness moderation in the second quarter, as investors contend with expected increase in inflation rate and uncertain direction of the monetary policy committee (MPC) of the Central Bank of Nigeria (CBN).

    Average return at the Nigerian equity market closed the first quarter ended March 31, 2013 at 19.4 per cent, implying capital gains of about N1.8 trillion within the three-month period.

    Analysts at leading investment and research companies however said they expected a moderation in the performance of the stock market in the second quarter.

    In its preview of the second quarter, Cowry Asset Management Limited stated that though expectations of corporate benefits fromblue chips and improved quarterly earnings could initially further drivetherally in Nigerian equities market, a temporal price correction after the earnings seasonshould impact negatively on the overall performance of the second quarter.

    Analysts at Cowry Asset Management said they expected that the “secondquartershouldcloselower”.

    Cowry Asset Management hinted that current overvaluation observed in some blue chip companieson the Nigerian Stock Exchange (NSE) might triggera short term run on “hotmoney” therebymounting a temporal downward pressure on the Naira.

    Financial Derivatives Company (FDC) in its latest economic flash report noted that the uncertainty in the direction of the MPC of the apex bank, which sets the Monetary Policy Rate (MPR), would make fixed-income traders and portfolio managers to take short positions.

    According to the report, although the decline in inflation rate to 8.6 per cent in March has raised expectations and clamours for reduction in benchmark interest rate from current level of 12 per cent, the likelihood of revenue shortfall may make the MPC to keep the MPR at current level.

    “The depreciating value of the naira can be linked to the falling oil revenue resulting from the state of the oil sector where oil output is plummeting and global oil prices are falling below estimates. The MPC will meet on May 20 and 21 and most indicators are in favor of a rate cut. However, the threat of a revenue shortfall and widening fiscal deficit due to the decline in oil price and production may tilt the balance in favor of maintaining the status quo once again,” FDC stated.

    Analysts underlined the importance of keeping the expected rise in inflation rate in the months ahead in view, which would further reduce the real returns on securities.

    Analysts at FSDH Merchant Bank Group estimated that though inflation rate is expected to remain in single digit throughout 2013, inflation would overshoot March’s 8.6 per cent level in April and May on account of base effects from last year.

    FSDH, however, indicated revised average inflation rate forecast of 8.6 per cent for 2013, a target that should encourage the apex bank to lower the MPR.

    “Rates and yields on fixed income securities may no longer trail inflation rate in the short term on account of other macroeconomic threats to the economy,” FSDH noted.

    Analysts pointed out that the stock market has not shown much enthusiasm to earnings reports and dividend recommendations in recent times because investors had factored the expected earnings into the pricing of these stocks.

    “As more result trickle into the market in subsequent weeks, we are most likely to see a haphazard trading pattern. We urge investors to stick to stocks with good fundamentals,” FSDH stated.

    Equities had glided through the first quarter with mouth-watering returns that dwarfed the celebrated performance of the stock market in the previous year. With three-month returns as high as 231 per cent, the first quarter of 2013 was the most resurgent first quarter in recent years.

    The All Share Index (ASI), the common value-based index that tracks all equities quoted on the Nigerian Stock Exchange (NSE), closed the first quarter at 33,536.25 points as against its index-on-board of 28,078.81 points for the year. This represented a three-month return of 19.44 per cent.

    Reflecting the value inherent in the ASI movement, aggregate market capitalisation of all equities rose by 19.6 per cent from 2013’s opening value of N8.974 trillion to close the first quarter at N10.733 trillion, indicating increase of N1.76 trillion.

     

  • Banks’ 2013 outlook ‘seems’ positive, says FT

    NIGERIAN banks have passedthrough reforms that seem to have put their future in a likely positive outlook this year, a report in the Financial Times (FT) of London has revealed.

    The report from a blog (beyondbrics) in the FT, said that in the last few years, the lenders have been to the bottom and back again, with the 2009 crisis, bailouts, mergers and the Asset Management Corporation of Nigeria (AMCON) are positive indicators that could make the sector shine this year.

    A report from Standard & Poors, “The Nigerian Banking Sector Outlook 2013: At the Start of a New Cycle,” had earlier said the mixture of strong economic growth in the country and political stability should underpin a year of expansion.

    It said economic growth and a sustained period of lower political risk, including the successful reform of the natural resource, power, and agricultural sectors could in its view improve Nigeria’s economic diversification.

    This, it said, would support stronger long-term economic growth, reduce the risks arising from an oil price or production shock, and help Nigerian banks diversify their loans books. It said loan growth could then proceed at manageable levels to the real economy, mitigating the inherent risks of foreign currency lending, large concentrations, and real estate bubbles.

    But FT said S&P had only a few months back, put out a report that worried over the capital ratios of Nigeria’s banks.

    It said Nigeria’s narrow economic structure also exposes the economy, and the banking sector, to a fall in oil prices or production. This risk is exacerbated by foreign currency lending and loan concentrations in the oil and gas sector. Furthermore, competition and shareholder expectations could lead to a return to aggressive lending growth and weak underwriting.

    FT said that although capital ratios do get a passing mention as a concern, but S&P now thinks that maintaining lower dividends will sort that out.

    Overall, S&P thinks that Nigeria’s banks will see a boost to their earnings in 2013 but not all the lenders.

    Nigeria’s banking sector is usually described as being in two tiers. S&P think that will split into three tiers, with rated banks in the upper two sections.

    It said that the larger banks mop up could leave the others behind. Actually, now S&P thinks that the smaller banks may be aiming for a particular niche, but that they will be unable to resist competing for low-cost retail deposits and for the expanding corporate sector, and all banks will grow in size. Foreign banks will remain on the margins, given the high barriers to entry.

    It insisted that for the past few years, Nigeria’s banks have been getting their house in order post-crisis. From here on, S&P thinks loan growth will increase around 20 to 30 per cent in 2013, from 12 per cent last year.

    At a conference in London earlier this year, Ladi Balogun, chief executive of First City Monument Bank, said that Nigeria’s big problem before was that most loans went to oil traders and speculators. “Now we are lending to the real economy,” he said, noting that the ratio of domestic credit to GDP was still very low.

    S&P supported that view: “Loan expansion could be supported in the short term by strong growth in non-oil sectors and the currently low levels of corporate and household leverage. We also anticipate that strong growth in the so-called reform sectors (namely power, agriculture, and infrastructure) will increase loan growth… For the first time, we see consumer lending as one of the major areas for loan growth in 2013. This is because the middle class is expanding in a context of high growth economic prospects, and banks are bullish about credit card and salary-backed lending opportunities.”

    It said that 2013 looks set fair but its 2014 and beyond that many should worry about, in terms of non-performing loans at least.

    “We expect asset quality to be stable in 2013, reflecting our expectations of strong economic growth and political stability. However, we believe rapid loan growth and increased competition will raise the inherent credit risk and conceal the growth of problematic assets, thereby raising credit risks for 2014 and 2015,” FT said.

     

  • Fitch affirms Nigeria’s BB rating, says outlook is stable

    Fitch Ratings has affirmed Nigeria’s Long-term foreign and local currency Issuer Default Ratings (IDR) at ‘BB-’ and ‘BB’ respectively with a Stable Outlook.

    The agency has also affirmed Nigeria’s Short-term foreign currency IDR at ‘B’. The Country Ceiling has been affirmed at ‘BB-’.

    The affirmation reflects progress on a number of fronts including a tighter fiscal stance, an improvement in electricity supply, increased agricultural output which has helped reduce imports, and an increase in international reserves.

    Nonetheless, the reinvigoration of structural reforms has yet to feed through to a higher growth rate and weaknesses including a vulnerability to oil price shocks, high inflation and governance challenges weigh on the rating.

    The partial elimination of the petroleum subsidy in January sent a strong message about the government’s reformist intentions.

    Although the move did not go as far as originally planned, it is an important step in the right direction.

    Moreover, the political furore it prompted paved the way for a clean-up of the subsidy payment system and crack down on the inefficiencies and fraud that have been uncovered.

    This has brought important gains to government revenues and international reserves, including the Excess Crude Account (ECA) which has risen to USD8bn this year.

    The reforms have yet to have a noticeable impact on GDP growth. Growth has slowed this year, averaging 6.2% in H112, compared to an average 7.4% in 2009-2011. Fitch believes the slowdown is temporary, affected by security and weather problems which have particularly affected agriculture.

    A recovery to 7% or more should be possible next year. However, there is no sign yet that growth is moving to a higher plain, which should happen as the reforms take hold.

    The banking system is also still convalescing, with credit growth barely positive in real terms due to high interest rates, limited lending opportunities and improved risk management.

    A redraft of the long-delayed Petroleum Investment Bill was recently submitted to parliament. The prolonged debate of this key piece of legislation, affecting a vital sector of Nigeria’s economy, has brought major uncertainty and been detrimental to investment. Passage of a bill that achieves the goal of a progressive fiscal framework while encouraging investment would be credit positive.

     

    Significant fiscal tightening is underway. Fitch expects the general government overall balance (including an estimate for state and local government) to move into small surplus this year – the first since 2008.