Multinationals, Conglomerates Quoted on NSE Lose N200billion in Six Months

Following the delay in the roll out of the new flexible foreign exchange policy, losses incurred by investors in conglomerates, multinational corporations and other big capitalized companies listed on the Nigerian Stock Exchange, NSE, hit N320 billion as at Monday, June 13

The Bourse had recorded a massive rally following the announcement of the Central Bank of Nigeria, CBN’s plan to launch a flexible foreign exchange regime.

However, the intense bear run brought down total market capitalization to N9.3 trillion, on Monday, from N9.7 trillion as at May 25, 2016, a day after the CBN announcement, with the blue chips accounting for about 80 per cent of the total losses.

Most companies in the real sector, especially the big brands have taken similar steps since 2015 to retain their market share and brand equity at huge cost, Vanguard learnt.

For Unilever Nigeria Plc, the major drag to performance in its full year 2015 results released earlier this year was the massive jump in finance cost, up 66 per cent year-on-year despite 37.5 per cent drop in borrowings in the year.

According to financial analysts at Afrinvest West Africa, a Lagos based investment house, “Unilever remains highly levered as 62.9 per cent of its full year 2015 operational profit went into finance cost. We still remain somehow bearish on the valuation of the company as the current macroeconomic challenges, most especially foreign exchange related operations are expected to take toll on overall performance.”

Berger Paints Nigeria Plc has attributed the drop in their financial performance for the first quarter ended March 31, 2016 to foreign exchange scarcity.

Guinness Nigeria Plc had complained that the currency restrictions imposed by the Central Bank of Nigeria, CBN, were hindering it from procuring the foreign exchange needed to bring in raw materials.

Brewers are spending more to produce each unit of products as cost of sales ratio increased to 51.13 percent in 2015 from 45 percent the previous year, leading to total cost industry-wide of over N250 billion with Nigerian Breweries accounting for about N151 billion in 2015 and N40.2 billion in the first quarter of 2016.

The 11.85 per cent rise in cost recorded by Nigerian Breweries in the first quarter of 2016, according to analysts at FSDH Merchant Bank, could be attributed to the rise in input costs. The cost of raw materials and consumables alone rose by 30.44 per cent to N24.56 billion from N18.83 billion in 2015. Guinness Nigeria’s cost in 2015 was N62 billion.