reports
- Vetiva Research
Breakfast Report - 19 June 2024
The World Bank approved a total loan worth $2.25 billion to Nigeria, subdivided into $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET), Development Policy Financing Program (DPF), and $750 million for the Nigeria Accelerating Resource Mobilization Reforms (ARMOR) Program-for-Results (PforR). This combined $2.25 billion package provides immediate financial and technical support to Nigeria’s urgent efforts to stabilize the economy and scale up support...
- Vetiva Research
Nestle Nigeria Plc Q1'24 Earnings Release - Topline surge unable to mi...
"Revenue growth driven by higher pricingIn Q1’24, Nestle reported substantial revenue growth in its food and beverage segments, amounting to ₦117 billion (+44% y/y), and ₦66.5 billion (+42% y/y), respectively. This growth was primarily driven by elevated pricing strategies within both segments, supported by ongoing efforts in optimizing the product portfolio. Consequently, the company's total revenue surged by 43% y/y to reach ₦183.5 billion for the period." Margins shri...
- 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
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
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
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
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 ...
- Oluebube Nwosu
GUINNESS NIGERIA PLC 9M'24 Earnings Release - Macro headwinds drag per...
Topline expands on price increases.In Q3’24, Guinness Nigeria demonstrated robust revenue growth, despite the prevailing macro challenges. The company delivered a satisfactory topline performance, driven primarily by increased pricing amid a decline in sales volume. Revenue for the quarter surged 44% y/year to ₦77.7 billion, as a result of this higher pricing.However, the company’s margins came under pressure due to rising costs. The jump in cost of sales outpaced revenue growth, rising by...
- Victoria Ejugwu
TOTALENERGIES MARKETING NIGERIA PLC Q1'24 Earnings Release - Bottom-li...
Amidst sector’s deregulation, higher fuel prices drive revenue growthFor the first quarter of the year, Total reported a stellar result, as turnover and profitability margins improved across board. Revenue came in 99% higher y/y to ₦269.8 billion, driven by broad-based improvements across all of its business lines. Turnover from its fuel business printed 108% higher y/y to ₦218.6 billion, on the back of higher product pricing. Similarly, revenue from its lubricants business saw a 69% y/y i...
- 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
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...
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