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Vetiva Research
- Vetiva Research
Nigerian Breweries Q1'24 Earnings Release - Price increases drive perf...
Price increases lift topline In Q1’24, Nigerian Breweries’ reported revenue growth of 84% y/y to ₦227.1 billion. This growth was primarily fueled by price increases, compounded by a low base effect resulting from the cash crunch experienced in the first quarter of 2023. Meanwhile, cost of sales grew by 83% y/y to ₦145.2 billion. This slower-than-revenue growth led to an increase in gross margin (+0.4ppts y/y). In light of this, gross profit rose to ₦81.9 billion (+87% y/y). " Operational...
Vetiva Research
- Vetiva Research
Breakfast Report - 06 May 2024
Acute fuel scarcity hit Nigeria last week. Reasons for the shortage ranged from turnaround maintenance across European refiners, and logistics challenges experienced by the NNPC, to bottlenecks regarding the renewal of marketing licenses. According to the Independent Petroleum Marketers Association of Nigeria (IPMAN), the situation could linger for at least 2 weeks before resolution. While PMS continues to trade at a premium over these weeks, we expect this event to impact inflation adversely in...
Abigail Alabi
- Abigail Alabi
OKOMU OIL PALM COMPANY PLC Q1'24 Earnings Release - Price increases bo...
"FX Volatility: Boon and Bane Global CPO production weakened in the quarter, due to lowered yields from ageing trees, higher biodiesel mandates, and the peaking of the El Nino weather pattern. As a result, global supply from key producing countries declined, causing prices to rise by 12% to $942.92/mt. Consequently, this informed pricing in the domestic and international markets. As a result, revenue from local sales increased by 72% y/y, while exports increased by 194% y/y. Overall, revenue fo...
Abigail Alabi
- Abigail Alabi
JULIUS BERGER NIGERIA PLC Q1'24 Earnings Release - FX gains bolsters b...
"Private sector demand defies macro environmentJulius Berger’s Q1 results showed a marginal increase in topline, buoyed by upbeat construction activities. Breaking it down by segments, revenue from the Government declined by 3% y/y to ₦94 billion. We attribute this to a possible slowdown in Capex rollout by the Government. However, interestingly, despite the biting impact of the inflationary pressures on consumers’ income, revenue from the private sector increased by 62% y/y to ₦16.7 billion, bo...
Abigail Alabi
- Abigail Alabi
LAFARGE AFRICA PLC Q1'24 Earnings Release - FX losses weaken bottom li...
For the first quarter, Lafarge recorded strong revenue growth of 50% y/y to ₦137.7 billion, driven by improved sales volumes, and higher cement prices. On the other hand, cost of sales increased by 59% y/y to ₦72.1 billion. Despite management’s efforts to rein in the cost pressures, cost of inputs such as fuel, power, and raw materials (+61% y/y: ₦45.5 billion) was exacerbated by the rising inflationary pressures and the continuous weakening of the currency. In light of this, gross margin ...
Vetiva Research
- Vetiva Research
Breakfast Report - 04 December 2023
President Bola Tinubu laid the 2024 Budget Proposal at the National Assembly, this week. The ₦27.5 trillion budget (+10% y/y) will be funded by oil revenue (₦7.9 trillion), and non-oil revenue (₦10.4 trillion), leaving a deficit of ₦9.2 trillion, which will be funded largely from domestic sources. The government expects Federation Account revenue to more than double due to the depreciation of the exchange rate, higher oil production projection, and the removal of subsidies. The budget is p...
Ibukunoluwa Omoyeni
- Ibukunoluwa Omoyeni
Inflation rises despite waning momentum
In October, headline inflation decelerated to 1.73% m/m (Sep’23: 2.10% m/m). The m/m slowdown in inflation was on the back of broad-based slowdown in both food and core inflation. Notably, food inflation decelerated to 1.91% m/m (Sep’23: 2.45% m/m) while Core inflation slipped to 1.42% m/m (Sep’23: 2.06% m/m). Overall, headline inflation rose by 61bps to settle at 27.33% y/y (Vetiva: 27.58%). Food inflation: High farmgate prices keep food inflation above 30%Amid the harvest season, fo...
Vetiva Research
- Vetiva Research
Breakfast Report - 04 September 2023
The Week Ahead In Q2’23, Nigeria’s real GDP growth slowed to 2.51% y/y, 22bps lower than our estimate (Vetiva: 2.73% y/y) and 103bps lower than the Q2’22 outcome (3.54% y/y). While the agricultural sector expanded at a faster pace, growth in the services sector slowed, and the industrial sector contracted. We attribute this outcome to the normalization of post-COVID economic activities and a sustained relapse in the oil sector. Despite the pipeline surveillance contract, the upstre...
Ibukunoluwa Omoyeni ... (+2)
- Ibukunoluwa Omoyeni
- Vetiva Research
NIGERIA GROSS DOMESTIC PRODUCT - GDP expands by 2.51% y/y, oil sector ...
In Q2’23, Nigeria’s real GDP growth slowed to 2.51% y/y, 22bps lower than our estimate (Vetiva: 2.73% y/y) and 103bps lower than the Q2’22 outcome (3.54% y/y). We attribute this outcome to the normalization of post-COVID economic activities and a sustained relapse in the oil sector. While the agricultural sector expanded at a faster pace, growth in the services sector slowed, and the industrial sector contracted. Industrials: Oil contraction weighs on growth outcomeThe oil sector rema...
Ibukunoluwa Omoyeni ... (+2)
- Ibukunoluwa Omoyeni
- Vetiva Research
November 2021 Inflation review - Base effects override festive pressur...
Base effects override festive pressures According to the National Bureau of Statistics, inflation trended downwards for the eighth consecutive month in November. Falling to 15.40% y/y (Vetiva: 15.24% y/y), headline inflation continues to benefit from the decision to retain fuel subsidies and the harvest season. On a month-on-month basis, however, inflation rose at a faster pace (Nov’21: 1.08% m/m), amid the frontloading of household items ahead of the festive season. Food inflation decelerates...
Vetiva Research
- Vetiva Research
Nigerian Breweries Q1'24 Earnings Release - Price increases drive perf...
Price increases lift topline In Q1’24, Nigerian Breweries’ reported revenue growth of 84% y/y to ₦227.1 billion. This growth was primarily fueled by price increases, compounded by a low base effect resulting from the cash crunch experienced in the first quarter of 2023. Meanwhile, cost of sales grew by 83% y/y to ₦145.2 billion. This slower-than-revenue growth led to an increase in gross margin (+0.4ppts y/y). In light of this, gross profit rose to ₦81.9 billion (+87% y/y). " Operational...
Vetiva Research
- Vetiva Research
Breakfast Report - 06 May 2024
Acute fuel scarcity hit Nigeria last week. Reasons for the shortage ranged from turnaround maintenance across European refiners, and logistics challenges experienced by the NNPC, to bottlenecks regarding the renewal of marketing licenses. According to the Independent Petroleum Marketers Association of Nigeria (IPMAN), the situation could linger for at least 2 weeks before resolution. While PMS continues to trade at a premium over these weeks, we expect this event to impact inflation adversely in...
Abigail Alabi
- Abigail Alabi
OKOMU OIL PALM COMPANY PLC Q1'24 Earnings Release - Price increases bo...
"FX Volatility: Boon and Bane Global CPO production weakened in the quarter, due to lowered yields from ageing trees, higher biodiesel mandates, and the peaking of the El Nino weather pattern. As a result, global supply from key producing countries declined, causing prices to rise by 12% to $942.92/mt. Consequently, this informed pricing in the domestic and international markets. As a result, revenue from local sales increased by 72% y/y, while exports increased by 194% y/y. Overall, revenue fo...
Abigail Alabi
- Abigail Alabi
JULIUS BERGER NIGERIA PLC Q1'24 Earnings Release - FX gains bolsters b...
"Private sector demand defies macro environmentJulius Berger’s Q1 results showed a marginal increase in topline, buoyed by upbeat construction activities. Breaking it down by segments, revenue from the Government declined by 3% y/y to ₦94 billion. We attribute this to a possible slowdown in Capex rollout by the Government. However, interestingly, despite the biting impact of the inflationary pressures on consumers’ income, revenue from the private sector increased by 62% y/y to ₦16.7 billion, bo...
Abigail Alabi
- Abigail Alabi
LAFARGE AFRICA PLC Q1'24 Earnings Release - FX losses weaken bottom li...
For the first quarter, Lafarge recorded strong revenue growth of 50% y/y to ₦137.7 billion, driven by improved sales volumes, and higher cement prices. On the other hand, cost of sales increased by 59% y/y to ₦72.1 billion. Despite management’s efforts to rein in the cost pressures, cost of inputs such as fuel, power, and raw materials (+61% y/y: ₦45.5 billion) was exacerbated by the rising inflationary pressures and the continuous weakening of the currency. In light of this, gross margin ...
Vetiva Research
- Vetiva Research
Breakfast Report - 29 April 2024
The Nigerian foreign exchange market was thrown into a frenzy this week after weeks of relative calm and rapid appreciation in the exchange rate. According to the CBN, Nigeria recorded its best FX turnover in 7 years, a feat, which culminated in the Naira’s emergence as the best-performing currency globally. In a shocking turn of events, the Naira halted its gains and depreciated by 19.6% last week. This can be attributed to the profit-taking activities of foreign portfolio investors, following ...
Vetiva Research
- Vetiva Research
Breakfast Report - 15 April 2024
Following the appreciation of the Naira in the parallel market to ₦1,250/$ levels, the Central Bank of Nigeria began the sales of FX to BDCs at the rate of ₦1,101/$. This influenced further bullish sentiments in the retail end of the FX market. We believe the c.$3 billion inflow from foreign portfolio investors in Q1 provides sufficient dollar liquidity over the near term. We also believe the commencement of domestic refining could provide a sustainable basis for more appreciation in the N...
Vetiva Research
- Vetiva Research
Breakfast Report - 08 April 2024
Last week, the Central Bank of Nigeria (CBN) released a circular reviewing the minimum capital requirements for Commercial, Merchant, and Non-interest banks operating in the country. The upward review in the minimum capital requirement is necessary to withstand external and domestic shocks, enhance the resilience of Nigerian banks, and spur credit-led growth in the Nigerian economy. The Minimum capital requirement for commercial banks with international, national, and regional licenses was incre...
Vetiva Research
- Vetiva Research
Breakfast Report - 18 March 2024
Headline inflation rose by +180bps to 31.70% y/y in February (January: 29.90% y/y). We attribute the surge to sustained security challenges in food producing states. Food inflation surged to a new 19-year high of 37.92% y/y (Jan’24: 35.41% y/y) on the back of sustained pressures on the prices of both farm (+68.27% y/y) and processed (+32.85% y/y) produce. Annual core inflation, which measures the change in non-food prices, rose by 123bps to 24.67% y/y in February (Jan’24: 23.44% y/y). This is a...
Vetiva Research
- Vetiva Research
Breakfast Report - 15 January 2024
As we expect Nigeria’s December inflation print this week, we believe inflation rose above 29% due to year-end festivities and the sustained passthrough of high transport prices. For much of H1’24, inflation could remain above the 30% handle, driven by low base effects in the context of PMS pricing. Amid these expected pressures, the Central Bank hinted at the adoption of an inflation targeting framework at the Annual Banker’s Committee Dinner. Literature tells us that inflation targeting i...
Nigeria Gross Domestic Product - Q2'18: Economic Growth Slows Amid Agr...
Economic growth slows amid agriculture concerns Compared to Vetiva and Consensus estimates of 1.6% and 2.0% respectively, Nigeria’s reported Q2’18 real GDP growth of 1.5% is disappointing. Although our estimate was close to the reported figure, the composition of GDP growth in the period is somewhat surprising. There was a more marked slowdown in agriculture and oil production than we had anticipated, growth in the service...
The Market Today - 26 July 2018
CBN plans more private sector credit despite hawkish tune Having corroborated the argument that a reduction in policy rate would not necessarily translate to increased credit to private sector, owing to structural impediments, the MPC highlighted key steps the CBN should take in a bid to stimulate credit expansion to the economy. Particularly, the Committee hinted that the CBN would provide direct credit intermediation by purchasing commerc...
Chinma Ukadike ... (+2)
- Chinma Ukadike
- Vetiva Research
Breakfast Report - 31 October 2022
The Central Bank of Nigeria (CBN) Governor announced last week that it will issue new Naira banknotes. The new bank notes (₦200, ₦500, and ₦1000 denominations) will be introduced in December 2022, and the old notes will be phased out by January 2023. According to the Governor, the decision was taken to tackle significant hoarding by members of the public, worsening shortage of clean banknotes, and increased ease of counterfeiting. Bank charges for cash deposits are statutorily suspended du...
Joshua Odebisi ... (+2)
- Joshua Odebisi
- Vetiva Research
STANBIC ITBC HOLDINGS PLC FY'21 (Unaudited) Earnings Release - Profits...
Profits dip 30% y/y amid weaker Non-Interest Revenues STANBIC recently released its (Unaudited) FY’21 earnings, reporting a 12% y/y decline in Gross Earnings to ₦205.9 billion. Although Interest Income declined by only 1% y/y to ₦104.7 billion, the bank’s Non-Interest Revenue fell 21% y/y to ₦101 billion, dragged by a 74% drop in trading revenue. Interestingly, the bank’s Q4 performance was consistent with prior years; gross earnings for the period...
Vetiva Research
- Vetiva Research
MONETARY POLICY DECISION - CBN leaves rates unchanged for the umpteent...
In its first meeting of the year, Nigeria refused to join its African counterparts in raising its Monetary Policy Rate (MPR). Angola, Ghana, and South Africa raised interest rates in 2021 to surmount biting inflationary pressures. Kenya and Nigeria, on the other hand, left their benchmark rates constant to support recovery. Current Monetary Policy Variables Instrument Current Rate Since Previous Rate Monetary Policy Rate 11.50% 22-Sep-20 ...
Vetiva Research
- Vetiva Research
December 2021 Inflation: Inflation rises for the first time in 9 month...
The National Bureau of Statistics (NBS) has confirmed that inflation nudged higher in the month of December. We note that the surge in month-on-month inflation to 1.82% m/m is the largest month-on-month print since May 2017. Thus, headline inflation rose to 15.63% y/y in December, 23bps above November’s print (15.40% y/y) and 74bps above Bloomberg consensus estimate of 14.87% (Vetiva: 14.79%). Energy inflation rose to a 4-year peak In December, we observed that the Housing, Water, Gas, and ot...
Vetiva Research
- Vetiva Research
SSA Consumer Goods Report - A resilient industry
Suffering from pandemic-exacerbated challenges like supply chain bottlenecks, increased operational inefficiencies and reduced physical interactions/demand, the FMCG industry has proved quite resilient as amid these disruptions from the pandemic, the industry is estimated to have grown by 10% y/y in 2020. As such, the growth prospects for the industry cannot be denied and remains viable. Africa’s population size has been a key consideration in the attractiveness of the region as an i...