The Nation Newspaper

Tag: Profit

  • Insurers: recession takes toll on premium, profit, others

    Hard times have hit the insurance industry as premium income has gone down, whilst claims cost and operational expenses have risen astronomically, thus taking its toll on margins, the Chairman, Nigeria Insurers Association (NIA), Eddie Efekoha, has said.

    Efekoha, who spoke at his investiture ceremony in Lagos, lamented that the performance of most insurance stocks on the Nigerian Stock Exchange (NSE) has been so flat that financial analysts have stopped including most insurance companies in their forecasts.

    He said generally, businesses are facing greater threats principally as a result of dwindling revenues, poor infrastructure, lack of power, inflationary trends in all sectors occasioned by the decline in the value of the naira. He listed insecurity amongst  other challenges as impediments facing insurers, adding that importation and local manufacturing are currently at low ebb.

    He said the insurance sector was directly impacted by these disruptions, adding that these times demands internal cohesion and collaborative action. “It therefore behoves on all of us as industry players to respond quickly to the changing dynamics of the market space so that we can remain relevant and bestow a worthy legacy to the future generation of insurers,” he advised.

    He said it was in the light of these developments in the local market that he decided to commit his chairmanship to address the theme-Sustainable Market Development Through Stakeholder Engagement.

    He said: “Essentially, all the programmes we will be executing will find space under this central theme. Very often, insurance as an instrument for financial intermediation is misunderstood by policy makers; it is therefore necessary to enter into constructive engagement with relevant stakeholders. This will include the need to share knowledge with judicial officers–magistrates and judges on the workings of insurance business and to fully equip them to be able to respond adequately to the rising cases of fraudulent claims in the market, among other adjudication issues.

    “We will engage with the legislators in the process of making laws that affect the economy at large and insurance industry in particular.  They are major stakeholders whose support the industry would require at all times. The various bills before the National Assembly require concerted efforts to push through the industry position. It is only with the active engagement with the lawmakers that the industry can protect its business interests.

    “On tax matters, we are all witnesses to the lingering issue of the heavy tax burden imposed on the insurance industry by CITA 2007. This further strengthens the need for us as an association to continually engage with the tax authorities with a view to amicably resolving all the issues and avoiding areas of future conflict.”

  • GTB grows pre-tax profit by 45% to N91.4b in first half

    GTB grows pre-tax profit by 45% to N91.4b in first half

    Guaranty Trust Bank (GTB) Plc recorded strong growths in incomes and profitability in the first half of this year as the most capitalised banking stock grew pre-tax profit by 45 per cent to N91.4 billion.

    Key extracts of the audited half-year report of GTB for the period ended June 30, 2016 released yesterday at the Nigerian Stock Exchange (NSE) showed that gross earnings rose by 37 per cent to N209.9 billion in first half 2016 as against N153 billion recorded in comparable period of 2015. Profit before tax rose from N63.11 billion to N91.38 billion. After taxes, net profit stood at N77.46 billion in first half 2016 compared with N53.37 billion recorded in first half of 2016.

    The bank balance sheet also emerged stronger. Total assets rose to N2.93 trillion by June 2016 as against N2.52 trillion recorded by December 31, 2015. The bank’s loan book grew by 14 per cent from N1.37 trillion recorded as at December 2015 to N1.56 trillion by June 2016. Total deposits also increased by 23 per cent to N2.01 trillion by June 2016 as against N1.64 trillion by December 2015. However, the proportion of non-performing loans to gross loans and advances spiked up slightly to 4.39 per cent but the group made coverage of 170.1 per cent to cushion the bad assets. The bank’s capital adequacy remains strong with capital adequacy ratio of 18.25 per cent while return on equity (ROAE) and return on assets (ROAA) stood at 35.8 per cent and 5.7 per cent respectively.

    The board of directors of the bank has recommended payment of interim dividend per share of 25 kobo to shareholders for the half-year results.

    Managing director, Guaranty Trust Bank (GTB) Plc, Mr Segun Agbaje said the bank had prepared well for the challenges in the industry by focusing on effective management of the balance sheet and adapting its business model to changing market variables.

    “The quality of our past decisions enabled us navigate the challenges that persisted in the business environment most of the half year period,” Agbaje said.

    According to him, while the current economic realities present some challenges to growth, the bank remains committed to its ideals of staying positive, delivering exceptional service to its customers and adding value to all stakeholders.

    He noted that with this solid financial result in the first half, GTB has continued to enshrine its position as a clear leader in the banking industry in Nigeria, with strong showing in Africa, a position validated by numerous awards and accolades received by the bank during the course of the year in recognition of its leading role in Africa.

  • Zenith Bank’s profit drops as bad loans rise

    Zenith Bank’s profit drops as bad loans rise

    Zenith Bank Plc witnessed declines in its top-line and profitability in the first half as the quality of the bank’s credit assets worsened. The proportion of non-performing loans to gross loans spiked up to 2.34 per cent by the end of first half 2016 compared with 1.44 per cent recorded in the comparable period of 2015.

    Zenith Bank’s share price dropped by 2.50 per cent to close at N15.60 per share as the much-awaited results filtered into the stock market.

    Key extracts of the audited report and accounts for the six-month period ended June 30, 2016 showed that gross earnings dropped by 6.23 per cent while pre and post tax profits declined by 12.35 per cent and 15.68 per cent respectively. Non-performing loans rose to N54.67 billion by first half of 2016, indicating addition of about N10 billion to the full-year classified loans of N44.9 billion.

    The report indicated that while gross loans and advances grew by 15.3 per cent during the six-month period, non-performing loans rose by about 22 per cent. Gross loans, which closed 2015 at N2.03 trillion, rose to N2.34 trillion by June 2016.

    The contraction in net earnings depressed earnings per share to N1.43 in first half 2016 as against N1.69 recorded in comparable period of 2015. The board of the bank has however recommended interim dividend per share of 25 kobo for first half 2016, retaining the same amount paid in 2015.

    Gross earnings closed June 2016 at N214.81 billion as against N229.08 billion recorded in first half 2015. Profit before tax dropped from N72.20 billion to N63.28 billion. Profit after tax declined from N53.18 billion to N44.84 billion.

  • 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.

  • STI makes N582m profit

    •Holds 21st AGM August 10

    Sovereign Trust Insurance (STI) Plc made Profit After Tax (PAT) of N582. 2 million in its 2015 financial year.

    This is a 97 per cent growth on the  N294. 9 million profit the firm made the previous year.

    Its Managing Director, Olaotan Soyinka made this known to reporters in Lagos.

    He said the underwriting firm would hold its 21st Annual General Meeting (AGM) on August 10, this year in Lagos.

    He said this was coming at a time the National Insurance Commission, (NAICOM) and the Nigerian Stock Exchange (NSE) granted approvals for its 2015 Annual Reports and Accounts.

    He noted that the firm achieved the growth in its profit as a result of the cost-reduction mechanism adopted by the company.

    He said management expenses reduced to N1.425 billion against N1.490 billion in the previous year with a 4.6 per cent decrease adding that the company’s Gross Premium Written, (GPW) in 2015, stood at N7.13 billion.

    He, however, said the highpoint of the AGM for the firm would be the introduction of the new chairman  and directors of the firm.

    He said the pioneer Chairman of STI Plc, Eze Ephraim F. Faloughi and other directors retired last April 7, after two decades in the organisation.

    He reiterated the company’s commitment to sustainable profitability in the years ahead.

  • Wema Bank posts N1.3b profit

    Wema Bank posts N1.3b profit

    Wema Bank Plc yesterday released its unaudited financial results for the six months of this year ended June 30th, showing a profit before tax of N1.3 billion. The result represents 11 per cent rise from N1.2 billion recorded in the first half of last year.

    The Bank’s Managing Director/Chief Executive Officer, ‘Segun Oloketuyi, said the 2016 financial year has been an eventful one for the economy.

    “The year has been characterised by deceleration on a number of economic indicators coupled with increasing energy costs, intensified by rising inflation, all within a tough operating environment. The banking industry has also not been exempted from these challenges,” he said.

    Oloketuyi said in spite of these challenges, Wema Bank has been able to deliver a modest improvement in the first half of the year.

    “Interest on income grew by 15.2 per cent from N17.5 billion in June last year to N20.2 billion in the current period, while fee and commission income improved significantly by 42.3 per cent from N2.2 billion in the first half of 2015 to N3.1 billion in same period of 2016.This growth in non-interest revenues was driven by our ongoing initiative to enlarge our footprint in the retail space while keeping customers at the heart of our operations. We believe that this is where we will continue to win in the marketplace,” he said.

    The bank chief said the lender will continue to closely monitor its costs as it optimises its operations. “Operating expenses grew from N11.1 billion in June 2015 to N11.4 billion at a rate of 2.7 per cent, lower than year-to-date inflation rate of 13.26 per cent. We achieved this through the continued migration of customers to alternative channels and deliberate efforts at reducing our cost to serve. These efforts are reflected in our profit before tax growing by 11 per cent to N1.3 billion from N1.2 billion in June 2015,” he said.

    He continued: “The bank has also increased its loan to deposit ratio from 65.1 per cent in December 2015 to 67.5 per cent as at June 2016, our emphasis on selective risk creation ensured we kept our Non-Performing Loans (NPL) ratio below three per cent, which is significantly lower than the industry average.

    “We expect that this risk underwriting discipline should continue to serve as a foundation for us to deliver consistent satisfactory results to our stakeholders in the second half of the year.”

  • NNPC subsidiary declares N11.8b profit

    A subsidiary of the Nigerian National Petroleum Corporation (NNPC), the National Engineering and Technical Company Limited (NETCo) yesterday announced a profit before tax N11.8 billion for its 2014 financial year.

    Its Chairman, Mr. Bello Rabiu disclosed this at the company’s 23rd, 24th and 25th Annual General Meeting (AGM)  at the headquarters of NNPC in Abuja.

    He said the firm’s profit stood at 160 per cent, adding however that its revenue increased  by 49 per cent from N7.9billion in the previous year to N11.8billion in 2014.

    According to him, the company was able to record profit despite the harsh operating environment in the oil and gas sector.

    Rabiu said: “Despite the challenges in the oil and gas industry, NETCo recorded impressive performance during the years under review. The profit before tax exponentially increased from N193million in 2012 to N963million in 2013 and N2.5billion in 2014.”

    Explaining the reason for combining the AGMs, he said: “It was due to the migration of the a National Accounting Standards to International Financial Standard Reporting which took auditors a while to complete. In addition, there was no substantive managing director in NETCo for a period of 15 months.”

    Speaking on the sideline of the event, the firm’s Managing Director, Mr. Siky Aliyu, said for the first time, NETCo was able to collaborate with two other local engineering firms and together the joint venture was able to record more than 550,000 man-hours on a strategic project.

    He said: “We did the entire detail engineering for the Total JV Egina FPSO project and we delivered it on time, safely and within budget. So that really tells you that there’s a lot of capabilities in the country and NETCo being the largest indigenous engineering company in Nigeria is really putting all the other resources together to execute all these projects. And we can do that for other projects that are still coming as there are quite a number of them in the pipeline now.”

    He stated that NETCo was partnering the engineering division of the NNPC in fixing the country’s refineries and urged operators to see the firm as the first point of call for engineering, procurement and construction activities.

  • Oando records N4.1b net profit in three months

    Oando records N4.1b net profit in three months

    Oando Plc’s operational reports and audited financial statements indicate that the leading indigenous energy group recorded a net profit of N4.1 billion in the first quarter of this year.

    The three-month report  is for the period ended March 31, 2016. It was released at the weekend.

    The report raises hopes on the prospects of the energy group in the current business year, after global and domestic headwinds left the company in the red in the previous two years. Oando also released its full-year audited report and accounts for the year ended December 31, 2015.

    Flowing from the results, Oando’s share price rose by 2.92 per cent on Friday, the fourth highest gain in a trading session that saw average decline of 0.99 per cent at the stock market.

    The results were delayed, the company said, due to an exhaustive audit process overseen by external auditors, Ernst & Young. As a result, it an extension was sought and approvals received by Oando from the Securities and Exchange Commission (SEC) and the Financial Reporting Council of Nigeria (FRCN).

    Investors will be buoyed by the N4.1 Profit-After-Tax increase, representing a 120 per cent increase compared to this Q1 2015 figures. The company’s financial highlights also indicated that turnover decreased by 34 per cent, with N64 billion realised compared to N97.1 billion for the same period last year.Global crude pricing fluctuation has changed the corporate landscape for oil companies, and has had far-reaching economic implications on Oando and many other indigenous firms in the industry.

    The Group’s Chief Executive, Oando Plc, Wale Tinubu, said the first quarter performance demonstrated the group’s dedication to return to profitability by the end of the 2016.

    “We have implemented constructive corporate initiatives which are driving forces for our business in this new global reality of economic restraint and lower oil prices in our industry. The successful and ongoing implementation of these initiatives reiterates our strategy of growth, deleverage and a return to profitability by the end of 2016. As a group, we have placed our focus on growing our upstream higher margined business while still holding fundamental interests in the midstream and downstream sectors. We look forward to a rewarding year, where we solidify our aspirations and return to profitability,” Tinubu said.

    According to him, as oil prices gradually increased, Oando had commenced 2016 with a reinvigorated strategy hinged on key corporate initiatives to drive the company back to profitability and ensure fiscal efficacy, including optimisation of its balance sheet the company focused on aggressive debt reduction and recapitalisation.

    He noted that the group successfully restructured its existing debt through a N94.6 billion medium term note (MTN) with a local consortium with lower interest rates and a renewed five-year tenor, while its upstream subsidiary, Oando Energy Resources (OER), completed its 2015 year-end summary of reserves recording a six per cent growth in 2P net reserves from 420.3 mmboe to 445.3 mmboe. The increase is attributed to the recognition of reserves related with producible oil and gas volumes. 2C Resources also increased by 70 per cent from 122mmboe to 208mmboe.

    Official operational report showed that in the midstream, Oando Gas & Power (OGP) maintained its legacy of building successful pipeline businesses, generating returns and transferring on operatorship. The company successfully concluded the divestment of the Akute Independent Power Plant, a 12.15 megawatts power station servicing the Lagos State Water Corporation. OGP also signed a development agreement with TVER/ Micro LNG to develop a 20 mmscf/d Mini LNG plant in Ajaokuta, Kogi State, which will service a 1,000km radius in the Northern and Central regions of Nigeria. The facility is expected to commence operations in the second quarter of 2017.

    Also, Oando Downstream agreed on the terms for the sale of a N70.5 billion partial divestment to Vitol, the world’s largest commodities trader and Helios Investments Partners, a premier West African focused private equity firm. This alliance has been hailed as a testament of Oando’s legacy of building a successful downstream giant and a rejuvenation of Nigeria’s downstream sector through operational efficiencies and economies of scale.

    For the full year ended December 31, 2015, Oando recorded a net loss of N49.7 billion on a turnover of N381.7 billion as the global oil and gas industry struggled with historic slump. Oando’s 2015 losses were largely due to impairments and the acquisition cost and interest on debt facilities in Oando’s prolonged acquisition of ConocoPhillips Nigeria’s (COPN) onshore hydrocarbon assets.

    Tinubu recalled that 2015 was a turbulent year for the global oil and gas industry as traditional energy business operations had to be altered to enable industry players survive new reality, utilising cost optimisation systems, increased operational efficiency as well as lower capital expenditure budgets.

    “As the global economy returns to normalcy, we remain committed in our drive to building platforms for long-term sustained value creating businesses,” Tinubu assured.

    Official report meanwhile showed that in spite of the numerous challenges, Oando made significant achievements across the value chain last year. Oando Energy Resources (OER), increased its total production to 20 million barrels of oil equivalent (mmboe) in the period compared with 9.1 mmboe in 2014. The increase between the annual periods was primarily from the acquisition of OMLs 60 – 63 in H2 2014, as well as the commencement of production from the Qua-Iboe field in Q1 2015.

    OER also successfully realised a cash inflow of $234 million by resetting its crude oil hedge from the previously hedged average of $95.35 per barrel to a new price of $65.00 per barrel on 10,615bbls/day till July 2017, as well as an additional 1,553 bbls/day until January 2019. The proceeds of the hedge reset along with cash-in-hand were used to pay down substantial portion of the company’s debt.

    By December 2015, Oando Gas & Power (OGP) had completed 87 per cent of the Greater Lagos Phase 4 pipeline project which runs from Ijora to Bonny Camp in Lagos State. The Midstream subsidiary also commenced an 8.5km pipeline expansion project for the Central Horizon Gas Company, to increase CHGC’s capacity to 70mmscf/day.

    Oando Downstream successfully concluded tie-ins to third party terminals via a 2km Horizontal Directional Drilled pipeline. The jetty will alleviate delays associated with product delivery into the Apapa, reduce long term cost of operations, as well as provide possible revenue streams from excess capacity. In 2015, the marketing arm completed upgrading of its LPG plants, the Apapa LPG plantcapacity was upgraded from 15mt/day to 30mt/day, representing a 100 per cent increment, while the Benin plant was upgraded to include best in industry safety standards.

  • FBN Merchant Bank aims high as profit hits N3.85b

    FBN Merchant Bank aims high as profit hits N3.85b

    FBN Merchant Bank Limited, the merchant banking subsidiary of FBN Holdings Plc, has assured that it would consolidate and sustain impressive performance in the years ahead as the wholesale banker doubled pre-tax profit to N3.85 billion in 2015.

    At the first annual general meeting of the company in Lagos, directors of the merchant bank said it has been positioned to improve on its performance and make better returns to shareholders. Audited report and accounts of the FBN Merchant Bank for the year ended December 31, 2015 showed that pre-tax profit rose by 113.1 per cent from N1.81 billion to N3.85 billion in 2015.

    FBN Merchant Bank, formerly known as Kakawa Discount House Limited, started operations in November 2015 following Central Bank of Nigeria (CBN)’s approval of its merchant banking licence and completion of operational prerequisites.

    Managing director, FBN Merchant Bank Limited, Mr. Kayode Akinkugbe, assured the shareholders that the merchant bank is appropriately positioned to ensure commendable dividends in the current financial year.

    He said the wholesale bank will remain committed to building its franchise as the leading merchant bank in Africa by creating opportunities for its clients.

    “This will be the first full year of operation and we are excited to launch the merchant bank on the strong platform of the FBN Holdings Group. We are confident that the management team, with the support of the board, will be able to face the challenges of 2016 and we will work tirelessly to make the belief placed in us deserved,” Akinkugbe said.

    He said the merchant bank intends to approach the market with necessary prudence and hunger, being very mindful of all the risks involved, with the aim to improve the quality of its income and increase its balance sheet while ensuring that it has better results this year.

    In his address, chairman, FBN Merchant Bank, Mallam Bello Maccido noted that the immediate past year was a challenging period for the Nigerian economy due to the election year and the transitional period for the company.

    According to him, while the volatility experienced in 2014 continued into year 2015 and led to spikes in rates and general uncertainty in the market, the purposeful leadership of the FBN Merchant Bank took advantage of the volatilities and rode the economic headwinds profitably within the financial year thereby returning commendable returns to shareholders.

    Group managing director, FBN Holdings Plc, Mr. UK Eke expressed confidence in the merchant bank, noting that it has all the necessary advantages to continue to grow.

    According to him, with the strength of the FBN Holdings Group, more than adequate capitalisation of the merchant bank at over 25 per cent capital adequacy ratio which signifies capacity to prudently sweat the balance sheet, a strong visionary board, and a highly professional and experienced management team, FBN Merchant Bank has been primed to soon dominate the wholesale banking subsector.

  • Sale of Nigerian unit boosts Tiger Brands’ profit

    South African consumer goods maker Tiger Brands has said its first-half-year earnings rose to 14 per cent, boosted by the sale of its Nigerian business. It however, warned that tough trading conditions would persist for the rest of the year.

    Headline earnings per share (EPS) – including continued and discontinued operations – reached 974.6 cents from 852.9 cents a year ago, South Africa’s biggest consumer foods maker said in a statement. Excluding the sale of Nigeria’s Dangote Flour Mills headline, EPS was flat.

    Tiger Brands sold its 65.7 per cent stake in Dangote Flour Mills last year after three years of failing to stem losses, which were worsened by the oil price slump and export restrictions in Nigeria.

    The company, which makes bread, breakfast cereals and energy drinks, bought the business as part of a plan to expand elsewhere in Africa to offset slow growth at home.

    Inflation pressures, a scorching drought and slow economic growth in South Africa, are expected to continue to hurt demand, Tiger Brands said.

    “The outlook for the balance of the year remains challenging, with downside risk to the macro-economic environment, both in South Africa and in a number of African markets, likely to add further pressure on consumers,” the firm said.

    Most export markets were hit by local currency devaluations and foreign currency shortages in many African countries. The company operates in Mozambique, Nigeria and Zimbabwe, among others.

    It said total sales rose by nine per cent to 12.9 billion rand. An interim dividend of 363 cents per share was declared.