About 40 companies listed on the Nigerian Stock Exchange (NSE) reported N827 billion profit before tax for the financial year ended 2016, five per cent below N873.9 billion reported in prior year financial year of 2015.
Amid macro economy headwinds that include slow purchasing power on the backdrop of hike in inflation rate and fiscal/monetary policies, some of these companies sustained growth in profit before tax and was able to declare dividend to investors.
The companies, LEADERSHIP exclusively gathered, include 15 banks, six oil and gas companies and two companies in industrial sector. Others are five insurance companies, two companies in the agricultural sector, four from the Fast-Moving Consumer Goods (FMCG) among other companies that include Unilever Nigeria Plc, Glaxo SmithKline Consumer Nigeria Plc, May and Baker Plc, Nigerian Breweries, Julius Berger Nigeria and Transnational Corporation of Nigeria.
The banking sector reported a total profit before tax of N588.8 billion in 2016 compared to N536 billion in 2015, 71 per cent total profit before tax reported by the 40 companies under review.
About 15 banks were represented in the chart with Guaranty Trust Bank Plc and Zenith Bank Plc reporting a total profit before tax of about N321.9 billion from N246 billion in 2015, half of the total profit before tax declared by the banks.
Only Ecobank Transnational Bank Plc recorded a loss of N33.7 billion in 2016 from N40.5 billion in 2015. Six banks recorded drop in profit before tax while nine banks profit before tax appreciated by nearly 30 per cent to N598 billion in 2016 from N460.5 billion in 2015.
Commercial banks in 2016 were faced with looming risk of another round(s) of devaluation, hurting capital and asset quality; margin squeeze from low interest rates; potential non-interest revenue losses (from commission on turnover (CoT) removal and weaker foreign exchange income from trading and trade finance activities.
Other challenges faced by the sector include higher impairments arising from a weaker economic backdrop, weaker oil price and currency, and potential fall-back to the banking sector from the new government’s active anti-corruption drive.
Data gathered by our correspondent in the oil and gas sector revealed mixed performances between the upstream, integrated and petroleum marketing companies.
Specifically, Seplat Petroleum Development Company Plc recorded a loss of N47 billion in 2016 from N17 billion profit before tax recorded in 2015 while Oando Plc’s also recorded a loss before tax of about N63 billion from N39 billion loss before tax in 2015.
Downstream companies like Mobil Oil Nigeria and Total Nigeria Plc recorded profit before tax N12billion and N20.35 billion in 2016 compared to N6.9 billion and N6.5 billion reported in 2015.
Forte Oil Plc profit before tax thus dropped from N7 billion to N5.3 billion in 2015 while MRS Oil Nigeria’s profit before tax gained 57 per cent to N2.3 billion in 2016 from N1.46 billion in 2015.
The industrial sector was also under pressure from the macro economy head winds. Two companies, Dangote Cement and Lafarge Wapco Plc were considered as Dangote Cement profit before tax dropped from N188 billion to N180.9 billion while Lafarge Wapco recorded a loss of N22.8 billion in 2016 as against N29 billion profit before tax recorded in 2015.
AIICO Insurance recorded significant increase in its profit before tax of the N24.8 billion declared by five insurance companies 2016 financial year from N1.8 billion in 2015. The AIICO Insurance company profit before tax moved from N1.8 billion in 2015 to N11.8 billion in 2016 while Consolidated Hallmark Insurance Plc is the only company with decline in profit before tax to N368 million from N704 million in 2015.
The Agricultural Sector made up of Presco and Okomu Oil saw profit before tax increase of about N37 billion in 2016 from N7 billion recorded in 2015 with Presco recording the highest profit before tax of N31 billion in 2016 from N4.2 billion in 2015.
However, the FMCG sector which was mostly hit by the 2016 recession reported a profit before tax of N52 billion from N34.6 billion in 2015. Dangote Sugar Plc and Dangote Flour Plc profit before tax closed 2016 at N19.6 billion and N11.8 billion from N16.2 billion and N12.4 billion in 2015 respectively.
The most significant drop in profit before tax was from Cadbury Nigeria Plc when it recorded a loss before tax of N562 million in 2016 from N1.6 billion in 2015. Despite declaring dividend to its shareholders, Nestle Nigeria Plc profit before tax dip by 27 per cent to N21.5 billion in 2016 as against N29 billion posted in 2015.