reports
- 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
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
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
AB InBev SA/NV FY'23 Earnings - Volume slump, higher costs drag full-y...
Volume decline drags revenue performance AB InBev’s revenue for the Q4 period fell marginally (-1% y/y) to $14.5 billion. This came as price increase was unable to mask the effect of volume decline. While price increase sent revenue per hl higher by 9.3% y/y, the elastic nature of consumer demand for AB-InBev’s product, caused volumes to dip by 2.6% y/y as consumers reacted to this price increase. Thus, revenue for the period came in lower. Finance costs take its tollFor the company’s operating...
- Vetiva Research
NESTLE NIGERIA PLC FY'23 EARNINGS - Naira volatility upturns operation...
Price jump combats volume declineNestle Nigeria showcased remarkable resilience in Q4'23, achieving a substantial 33% y/y growth in revenue, totaling ₦150.5 billion. The company’s two product segments recorded growth in Q4’23. Food was ₦99.3 billion (+38.5% y/y) while Beverage was ₦51.2 billion (+23.1% y/y). Also, Nestle’s cost of sales grew at a slower pace, +25% y/y to ₦93.5 billion in Q4’23. Thus, gross profit grew by 48% y/y in Q4’23 to ₦57 billion, pushing gross margin to 38% (Q4’22: 34%...
- Vetiva Research
Breakfast Report - 26 February 2024
The National Bureau of Statistics confirmed that Nigeria’s GDP expanded by 3.46% y/y in Q4’23, which is 28bps above our estimate (Vetiva: 3.18% y/y) and 93bps above Bloomberg Consensus estimate (2.53% y/y). This represents the best quarterly expansion during the year and can be attributed to the recovery in the oil sector. For the record, the oil sector recorded its first positive output growth since March 2020, thus recovering from a 3-year-long recession. Overall, this contributed to the full-...
- Vetiva Research
NIGERIAN BREWERIES PLC FY'23 EARNINGS - Price increases mask volume de...
Robust revenue growth in a challenging landscapeNigerian Breweries navigated a turbulent business landscape in Q4'23, marked by significant shifts in the Nigerian economy. Despite these challenges, the company achieved a commendable 26% y/y growth in revenue, reaching ₦197.8 billion in Q4’23. This growth, in the face of cash shortages, high inflation rates, and overall thinning consumer wallets underscores the impact of the price increases implemented across its catalogue during the period. Ulti...
- Vetiva Research
Price increases boost gross margin
Pricing increases elevate toplineIn the fourth quarter of 2023, International Breweries demonstrated a substantial 38% y/y growth in revenue, reaching ₦80.5 billion. This impressive increase was due to higher prices across the firm’s product lines. While INTBREW has maintained its lowest price strategy, its products’ prices significantly rose in FY’23 due to the inflationary environment. These higher prices helped improve the firm’s gross margin to 18% in Q4’23 (Q4’22: 11%) as cost of sales rose...
- Vetiva Research
Breakfast Report - 05 February 2024
Last week, we saw a sizeable devaluation at the Nigerian Autonomous Foreign Exchange Market (NAFEM). This followed the circular sent to clamp down on the under-reporting of transaction rates at the NAFEM. This saw the Naira get devalued by 25% on January 30, 2024. Thereafter, the apex bank also clamped down on banks’ appetite for foreign currency exposure by ensuring matching of foreign currency assets and liabilities to prevent speculation. We believe these measures are to aid price discovery i...
- Vetiva Research
GUINNESS NIGERIA PLC H1'24 EARNINGS - Navigating growth amidst cost ch...
Revenue growth and cost pressuresIn Q2'24, Guinness sustained its impressive revenue growth, with a 27% increase year-on-year, reaching ₦83.1 billion. This pushed up H1’24 topline to ₦142.6 billion, a 20% increase y/y. Half-year revenue growth was driven by a change in product mix amidst significant price increases. All product segments noted growth as follows: Malts – 41%, Ready-to-drink beverages – 29%, Premium spirits – 19%, Mainstream spirits – 11%, and Brand Guinness – 7%. Nonetheless, sign...
- Vetiva Research
FLOUR MILLS OF NIGERIA PLC 9M'24 EARNINGS - Topline expansion momentum...
Q3 revenue growth expands gross margin In the third quarter of FMN’s fiscal year 2024 (Oct to Dec ‘23), the company exhibited an exceptional performance, with revenue skyrocketing to ₦594.6 billion, a substantial 51% increase compared to Q3'23. This remarkable growth came about by a mix of volume growth and price increase especially in its retail markets. All segments saw considerable expansion in the quarter: Food grew by 38% to hit ₦386.3 billion, Agro-allied by 41% to ₦92.2 billion, Sugar 152...
- 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...
- Vetiva Research
Breakfast Report - 02 January 2024
Oil production fell short of target in 2023, despite high oil prices and a favourable OPEC production quota (initially 1.7 mb/d). The devaluation of the Naira and removal of subsidies were key revenue drivers for the year, as the former shored up the naira equivalent of oil USD receipts while the latter reduced the deductions made to gross oil revenues. Notwithstanding, the shortfall in oil production weighed on the contribution of oil to federation revenues. Gross oil and gas revenues (9M...
- Vetiva Research
FY'24 SSA Consumer Goods Outlook - Macro headwinds limit growth
The production of household brand products in the Sub-Saharan African (SSA) region faces a series of challenges within the fast-moving consumer goods (FMCG) sector. Despite encountering a challenging macroeconomic landscape, notable accomplishments were witnessed in the FMCG industry across SSA throughout 2023. The sector remains a cornerstone in propelling manufacturing and economic development, significantly contributing to job creation throughout the SSA region. Recognizing the escalating...
- Vetiva Research
FY’24 SSA Industrials Outlook: A glimpse of hope
Price hikes offset declining volumesIn 2023, the cement industry experienced a decline in volumes attributed to cash shortages, election uncertainties, and prolonged heavy rainfall, which impeded construction activities… . Price cut triggers industry uncertaintyIn October, BUA Cement made a surprising announcement to reduce the ex-factory price of cement in Nigeria from ₦4,200 to ₦3,500 per bag. While this was met with excitement as it was seen as a potential relief to Nigeria’s housing cost c...
- Vetiva Research
Breakfast Report - 11 December 2023
Over the weekend, Moody’s upgraded Nigeria’s sovereign credit rating outlook from stable to positive, while retaining Nigeria’s local currency rating at B2 and its foreign currency rating at Caa1. Since Moody’s downgrade in January, Nigeria has implemented key policies to address issues raised earlier. The favourable change in outlook was driven by the possible reversal of the deterioration in Nigeria's fiscal and external position as a result of the authorities' reform efforts. According to ...
- 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
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
GUINNESS NIGERIA PLC Q1'24 Earnings - Price increase sustains revenue ...
Cost of sales outpaces revenue growth. In Q1'24, GUINNESS saw an improved topline performance, reporting a revenue of ₦59.5 billion, representing a 13% increase y/y. This came as a result of sustained price increases. This was followed by a higher increase in costs of sales (19.6% y/y) to ₦41.4 billion. This led to gross profit margin dropping to 30% (Q1’23: 35%), bringing gross profit to ₦18.1 billion (down 10% y/y). Cost containment proves effectiveOperating expenses for Q1'24 amounted to ...
- Vetiva Research
INTERNATIONAL BREWERIES PLC 9M'23 Earnings - Higher prices boost topli...
Topline records impressive growthDespite facing a decline in volumes due to sustained retail-reflective price increases, INTBREW reported significant topline gain in Q3’23, driven by these price increases. Revenue reached ₦67.6 billion, up 38% y/y in Q3’23. On the back of this solid topline growth and slower growth in cost of sales (up 37% y/y to ₦53 billion), gross margin rose 1ppt to 22% in Q3’23. This positive gross margin momentum pushed gross profit to ₦14.6 billion, reflecting a robust 41%...
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