Negative market sentiments submerge top Consumer Goods stocks in July

The Nigerian All Share Index closed the month of July with a loss of about 2.8% month-to-date (MTD) as the equity market witnessed sustained sell pressure on most of the quoted stocks.

The equity trading recorded a loss of N773 billion during the month ended July 31, 2022, as investors continue to increase their sell pressure, especially on blue-chip stocks.

Checks by Nairametrics revealed that the Consumer Goods Index (CGI) which measures the performance of the consumer companies quoted on the floor of the Nigerian Exchange depreciated by 8.12% during the month, from 623.99 index points to 573.27 points.

Despite that consumer goods offers investors safety during recessionary climates, because these companies sell goods such as food and cleaning products that consumers rely on regardless of the state of the economy, most of these stocks which performed well during the half year of 2022 slipped to negative territory following sustained sell pressure mounted on the stocks during the month.

According to data obtained by Nairametrics from the NGX which focused on the worst performing consumer goods stocks during the month under review, Nigerian Breweries Plc, International Breweries Plc, PZ Cussons Nigeria Plc Cadbury Nigeria Plc and Unilever Nigeria Plc made the list of top five poor performing firms.

These stocks were selected based on their price-performance from month to date and are represented by the percentage gained.

Nigerian Breweries Plc – 17.42%

The shares of Nigerian Breweries witnessed negative run on the shares during the month. The brewery firm listed on the NGX and the most capitalized brewery in Nigeria and has lost 17.42% in price in the month of July, from N58.80 to N47.70. The company witnessed sell pressure which drove down the market capitalization to lose N82.72 billion to stand at N392.137 billion at the close of trading on July 31, 2022, from the opening figure of N474.858 billion at the beginning of trading on July 1st.

Nigerian Breweries Plc announced a total sum of N274.03billion as revenue for the first half of the 2022 financial year, which ended on June 30, 2022. The company also recorded a Profit After Tax (PAT) of N19.08 billion during the period.

According to the unaudited report and provisional results filed with The Nigerian Exchange Limited, the company experienced a 31% growth in revenue compared to the N209.22 billion recorded in the corresponding period in 2021.

The results also revealed Profit After Tax for the six-month period under review rose by 142.8%, from N7.86billion to N19.08billion. Similarly, basic earnings per share in H1 2022 was 237 kobo as against 97 kobo that was recorded in H1 last year.

According to a statement signed by the company secretary/Legal Director, Uaboi Agbebaku, the company’s increase in profit was driven mainly by top line growth resulting from its pricing strategy and better mix.

Further analysis of the results revealed that the Cost of Sales increased by 18.3%, from N131.34 billion in H1, 2021 to N155.35 billion in 2022 in the same corresponding period. Marketing, Distribution, and Administrative expenses also rose by 44.6%, from N58.42 billion in H1, 2021 to N84.45 billion in H1, 2022, driven by the increase in commercial activities post-COVID, rising diesel prices and higher wages arising from collective labour agreements

The shares of the company currently trades at N47.70 and has gained 4.6% year-to-date.

International Breweries Plc – 15.07%

Shares of International Breweries Plc have also dropped from the positive run. The brewery company lost 15.07% in price during the month, from N6.30 to N5.35 per share. The company’s share price drop drove down the market capitalization to lose N25.519 billion to close at N143.712 billion at the close of trading on July from opening figure of N169.231 billion at the beginning of trading on July 1st

International Breweries Plc (IBPLC) had bounced back to profitability from its loss position, recording N1.9 billion Profit Before Tax (PBT) for the first quarter ended March 31, 2022, representing 152.8% increase from N3.6 billion loss before tax in Q1 2021.

The financial statement released to the Nigerian Exchange Limited (NGX) showed that the company’s revenue grew to N52.7 billion during the period, representing a 47.6% increase compared to N38.96 billion reported in Q1, 2021.

Commenting, Hugo Dias Rocha, Managing Director, IBPLC, said: “Based on a consistent commercial strategy, we are growing ahead of our industry. We have continued our journey to profitability,which translates to strong results. We remain committed to creating value to our stakeholders consistently.

“Building on top of the momentum of a strong 2021, our business started 2022 on a positive note. On the back of firm consumer demand for our brands, robust revenue management and volume growth ahead of industry, our revenue grew by nearly 50% in Q1 2022. We saw consistent growth across all our portfolio.

“Keeping focus on profitability, we have enabled our high-end company brands to grow healthy in the market. Our global brand, Budweiser and our newest innovation, Trophy Extra Special Stout are on a growth path as part of the high-end growth of above 40%.’’

The shares of the company currently trades at N5.10 and has gained 3.03% year-to-date.

PZ Cussons Plc-11.45%

The share price of PZ Cussons Nig Plc, decreased by 11.45% during the period under review, from N9.60 per share to N8.50 per share, reducing the market capitalisation to a loss of N4.367 billion or 11.45% to close at N33.749 billion at the end of July 2022 from the opening figure of N38.116 billion.

PZ Cussons Nigeria Plc, released its Q4 2021/22 unaudited results for the period ended May 31, 2022, reporting a profit of N758.37 million, representing an 11.71% increase year on year.

A cursory view of the result reveals the company’s profit was driven by a significant rise in the company’s main business segments – the sale of home and personal care products and durable electrical appliances.

These segments delivered revenue of N25.50 billion during the period compared to N22.60 billion in the same period last year. Revenue growth from the segments was at 12.85% year on year.

The shares of the company currently trades at N8.50 and has gained 39.34% year-to-date.

Cadbury Nigeria Plc – 10.72

The share price of Cadbury Nig Plc, has also benefited from the market downturn dropping by 10.72% during the period under review, from N17.25 per share to N15.40 per share, decreasing the market capitalisation to lose N3.474 billion or 10.72% to close at N28.924 billion at the end of July 2022 from the opening figure of N32.398 billion.

Cadbury Nigeria Plc, a subsidiary of Mondelēz International, has continued to sustain its current repositioning drive. The Company’s recently released financial highlights for the first half of 2022 (covering the period January 2022 to June 2022), showed that its turnover rose to N27.8billion in H1 2022, representing an increase of 50.5% over the N18.5billion recorded within the same period in 2021.

Similarly, Cadbury Nigeria’s profit for the period under review, grew by 553.7% from N516million in H1 2021, to N2.34billion in H1 2022. The Company’s basic earning per share also maintained an upward trajectory, rising by 553.7 percent from 27.48 kobo to 124.68 kobo, within the same period.

In a statement issued by the Company, Oyeyimika Adeboye, Managing Director, Cadbury Nigeria, said Cadbury Nigeria is leveraging its resources to remain competitive in a challenging business environment.

She said: “We operate in a tough business environment characterized by FX scarcity, continued devaluation of the Naira, and rising operational costs. We developed some strategies internally to enable us to cope with these challenges. We will continue to create value for our consumers and deliver superior returns to our shareholders.”

The shares of the company currently trades at N15.40 and year-to-date has appreciated by 75%.

Unilever Nigeria Plc-4.05%

Shares of Unilever Nigeria Plc have also suffered from the market slide with a loss of 4.05% in price during the month, from N14.80 to N14.20. The negative activities drove down the market capitalization to lose N3.447 billion to close at N81.579 billion at the close of trading on July 31, 2022 from opening figure of N85.026 billion at the beginning of trading on July 1st.

Unilever Nigeria Plc recently released its unaudited financial statement for the half year ended 30 June 2022.

According to unaudited financial statement, the manufacturing firm reported a profit after tax of N1.906 billion for the half year, from N714.780 million the previous year, representing a growth of 167%.

The profit was boosted by other income of N66.659 million arising from transitional service agreement income.

According to the company, subsequent to the disposal of the Tea business in October 2021, Unilever entered into a Transitional Service Agreement with the new owner, Unilever Tea MSO Nigeria Limited. The Agreement will be in place for a period of 15 months, during which time Unilever would provide production and sales support to Unilever Tea MSO Nigeria Limited in exchange for a fee.

Revenue grew by 35.12% to N43,806 billion during the period under review from N32,420 billion reported in 2021.

However, cost of sales rose by 22% to N29.605 billion in 2022 as against N24.204 billion.

The shares of the company currently trades at N15.00 and has gained 3.44% year-to-date.

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