An indigenous petroleum marketing company, Conoil Plc has said its profit after tax rose by 54 per cent for Q1, 2019, driven by efficient cost management. While the company grew its revenue by 13.8 per cent, from N31.3 billion, to N35.6 billion, significant reduction in distribution, administrative and finance costs enhanced its bottom-line.
According to the firm, while announcing its audited results, recently, said its cost of sale rose from N28.3 billion to N32.7 billion, making gross profit to decline marginally from N3.1 billion to N3 billion. However, distribution expenses fell from N650 million to N449 million, just as administrative expensive reduced from N1.669 billion to N1.556 billion. Finance cost fell from N525.9 million to N506.52 million.
Consequently, profit before tax increased from N310.73 million in 2018 to N478.2 million, while PAT rose from N211.29 million to N325 million in 2019. Market operators said if the Q1 performance could be sustained in the second quarter and throughout the year, shareholders should expect higher dividend.
In addition, Conoil Plc recently announced a dividend of 200 kobo per share for the 2018 financial year after the company posted a PAT of N1.796 billion for the year ended December 31, 2018, showing an increase of 14 per cent above the N1.579 billion posted in 2017.
Chairman of Conoil Plc, , Mike Adenuga(jnr) had last year assured shareholders that conscious efforts would be directed at achieving better execution of value-added products and services especially in the areas of marketing and customer management.
He had said company kept expanding its retail network across the country and the non-fuel retail business was being revamped with a view to achieving future growth targets.
He further explained that every segment of the business from aviation to LPG to specialised products would continue to receive the desired attention with a view to achieving and maintaining world-class levels of operating and capital discipline.
Adenuga said the company was fully charged to consolidate its competitiveness in the different segments of its business by exploring and developing emerging markets while holding its grounds in areas where it has competitive advantage.
Towards this goal, he said company introduced into the market, another brand of quality engine oil, Conoil Crown Heavy Duty Oil manufactured specially for the mass market of car owners.
He added that, “With the introduction of this product, we are poised to fill the yawning void in the industry as a pragmatic marketer of first choice”.
Also expressed gratitude to stakeholders for their support for the modest progress it recorded in spite of the odds and the unfriendly business environment it operated last year.
Dangote Sugar Refinery Revenue recovers but cost pressures remain
Dangote Sugar in its recently released 9M 2019 financials reported a marginal y/y growth in revenue to N117.4 billion in 9M 2019 from N116.8 billion in 9M 2018. However, on a q/q basis, Revenue dipped 12.2% q/q to N37.1 billion in Q3 2019 from N42.2 billion in Q2 2019. We note Revenue in Q3 2019 came in higher than Q3 2018 Revenue by 13.4% y/y. Meanwhile, Net Income declined 12.0% y/y to N14.7bn for 9M 2019 while declining 6.2% q/q to N3.7 billion for Q3 2019.
We have revised our revenue estimate and consequently profit lines upward given recovery in volumes on the back of reduction in influx of smuggled sugar as well as recovered market share following price increase by key competitor, Golden Penny (Flourmills). However, we note that cost pressures stemming from higher raw sugar price as well as increasing freight costs due to the Apapa wharf gridlock remains a source of concern. Thus, despite an upward revision of our key profit lines, they remain lower than 2018 numbers.
We raise our target price for Dangote Sugar to N13.87/s from N13.27/s previously while we maintain our Hold recommendation on the stock given. We note that investors’ interest in the stock has improved over the past few months given attractive dividend yield as well as news of the border closure. We are however less optimistic given the uncertainty around the timeline for the border closure. We arrive at our target price using a combination of the DCF and relative valuations in a ratio of 60:40.
Dangote Sugar in its recently released 9M 2019 financials reported a marginal 0.6% y/y rise in Revenue to N117.4 billion in 9M 2019 from N116.8bn in 9M 2018. However, on a q/q basis, Revenue dipped 12.2% q/q to N37.1bn in Q3 2019 from N42.2 billion in Q2 2019. However, we note Revenue in Q3 2019 came in higher than Q3 2018 Revenue by 13.4% y/y which suggests the possibility that the company may be feeling the positive impact of the border closure which has limited entry of smuggled sugar.
Across business segments, sales of the 50kg bag category grew 0.9% y/y to N111.2bn while Revenue from retail sugar was up 2.7% y/y to N3.3bn. On the other hand, Revenues from molasses and freight services were down 26.8% y/y and 7.3% y/y. Furthermore, we compared business segment growth in Q3 2019 with the same period in 2018. We observed strong Q3 2019 y/y recovery in the 50kg bag category (up 15.4% y/y) and Retail sales (up 7.3% y/y). The strong rebound reflects reduction in the influx of smuggled sugar.
The Cost of Sales (adjusted for depreciation) was up 2.4% y/y to N85.4 billion for 9M 2019 from N83.3 billion in 9M 2018. The y/y increase in Cost of Sales reflects the mild pressure on raw sugar prices in the first nine months of the year (our benchmark raw sugar price is up 2.2% y/y). This is notably evident in the 4.6% y/y increase in raw material costs. On a q/q basis, Cost of Sales fell by 13.3%, higher than the 12.2% q/q decline in revenue.
The decline in Cost of Sales reflects lower volumes as well as softer q/q raw sugar price (Q3 2019 vs Q2 2019). Against this backdrop, Gross Profit fell 4.1% y/y to N32.1 billion in 9M 2019 from N33.4 billion in 9M 2018. On a q/q basis, Gross Profit was down 8.6% to N9.0 billion in Q3 2019 from N9.9 billion in Q1 2019. Gross margin was 27.3% in 9M 2019, 1.3ppts lower than the 28.6% reported for 9M 2018.
Banks Boosts Total Assets By 10% to N41.4 Trillion in a Year
In its bid to show growth in the banking sector, the total assets of the 27 deposit money banks rose by 10 percent, year-on-year to N41.4 trillion in the 12 months ending October 2019.
The growth however represents a slight decline when compared to 11 percent growth recorded in the 12 months ending October 2018.
The Central Bank of Nigeria (CBN) disclosed this in its November Economic report which revealed that total assets and liabilities of banks rose to N41.425 trillion as at October 31st 2019 from N37.338 trillion as at October 31st 2018, representing 10 percent growth.
According to reports, “Total assets and liabilities of commercial banks amounted to N41.4 trillion at end-October 2019, showing 4.6 per cent increase, compared with the level at the end of the preceding month. Funds were sourced, mainly, from increase in unclassified liabilities, and the mobilisation of time, savings and foreign currency deposits. The funds were used, mainly, to acquire unclassified assets, foreign assets and to boost reserves.
“Commercial banks’ credit to the domestic economy rose by 0.6 per cent to N22.3 trillion at end-October 2019, compared with the level at the end of the preceding month. The development was attributed to the rise in its claims on the private sector.
“Total specified liquid assets of banks stood at N14.3 trillion at end October 2019, representing 59.3 per cent of their total current liabilities. At that level, the liquidity ratio was 0.9 percentage point lower than the level at the end of the preceding month, and was 29.30 percentage points above the stipulated minimum liquidity ratio of 30.0 per cent.
Experts commend CBN for cutting lending rate to 13.5%
“The loan-to-deposit ratio, at 61.9 per cent, was 0.3 percentage point below the level at the end of the preceding month and was lower than the maximum ratio of 80.0 per cent by 18.10 percentage points.” The report added.
FCMB Records N135 Billion Earnings, N11 Billion Profit in Nine Months
FCMB Group Plc has announced a profit after tax of N10.791 billion for the nine months ended September 30, 2019, showing a marginal decline of 4.8 per cent compared with N11.341 billion recorded in the corresponding period of 2018.
According to the results released recently, showed gross earnings of N135.824 billion, up 2.2 per cent from N132.875 billion in 2018. Net interest income rose from N53.235 billion to N56.321 billion, while net fee and commission income fell from N15.459 billion to N15.307 billion in 2019. Net impairment losses fell by 46 per cent from N14.626 billion to N7.852 billion.
However, personnel expenses rose from N18.111 billion to N21.563 billion, just as general and administrative expenses increased from N21.857 billion to N23.439 billion, while other operating expenses grew from N12.267 billion to N13.387 billion.
Consequently, profit before tax fell from N14.767 billion in 2018 to N12.803 billion, while profit after tax stood at N10.791 billion compared with N11.341 billion in 2019.
The nine months performance indicates that FCMB Group has a significant ground to cover in the remaining quarter of 2019 to record higher bottom-line for the full year.The financial institution had posted a growth of 73 per cent in profit in 2019.
The Chairman of FCMB Group, Mr. Oladipupo Jadesimi, said: “In 2018, we continued to move forward on the path of good governance, strengthening and improving our corporate governance structure and bringing it into line with our long-term strategy and the highest international standards. This was in order to increase the confidence of our shareholders, investors and other stakeholders in an environment that is demanding even more transparency.”
Also speaking, the Group Chief Executive of FCMB Group Plc, Mr. Ladi Balogun, said: “The Commercial and Retail Banking Group (which includes First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited) grew its profit by 61 per cent, driven by improved performance in our consumer finance business and increase in fees and commissions.”
Safaricom post-IPO investor wealth rises to Sh1.3trn peak
Absa lending capacity boosted with $497m guarantee
$33m German bank cash to support 10,000 SMEs
Dangote Targets $30bn in Revenue in Two Years
Rolls-Royce announces highest annual sales of 5,152 cars in 2019
Paga names Cleverly as new Group CFO
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Hyundai plans to invest $87 billion into producing 44 new electric vehicles
- Safaricom post-IPO investor wealth rises to Sh1.3trn peak
- Absa lending capacity boosted with $497m guarantee
- $33m German bank cash to support 10,000 SMEs
- Dangote Targets $30bn in Revenue in Two Years
- Rolls-Royce announces highest annual sales of 5,152 cars in 2019
- Paga names Cleverly as new Group CFO
- ‘e-Cashier Processing 140 Billion Transactions’, Says Owolabi
- Hyundai plans to invest $87 billion into producing 44 new electric vehicles
- Completed e-payment transactions hit N203 trillion in 6 Months , says CBN
- NNPC Announces N13.23bn Surplus for October
- Paga Announces over $2 billion worth of transactions in 2019
- Dangote Sugar Refinery Revenue recovers but cost pressures remain
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