Worst performing consumer goods stocks in August 2022

The Nigerian All Share Index, which is the broad index that measures the performance of Nigerian stocks dropped below 50,000 index points to close trading at 49,836.51 points on August 31, 2022.

Checks by the Nairametrics showed that activities on the Nigerian Exchange, which opened the month at N27.162 trillion in market capitalization and 50,370.25 in index points at the beginning of trading on August 1, 2022, closed on August 31, 2022, at N26.880 trillion and 49,836.51 index points, thus making a month to date loss of about N282 billion or 1.05%.

Further checks revealed that the Consumer Goods Index (CGI), which measures the performance of the consumer companies quoted on the floor of the Nigerian Exchange appreciated slightly by 4.93% during the month, from 573.27 index points to 600.56 points. 

Consumer goods companies offer investors safety during recessionary times. However, most of the industry’s stocks, which had performed well during the half year of 2022, recorded losses because of this being a pre-election year, which is usually characterized by negative sentiments.

According to data obtained by Nairametrics from the NGX, which focused on the worst performing consumer goods stocks during the month of August, Cadbury Nigeria Plc, Unilever Nigeria Plc, International Breweries Plc, Nigerian Breweries Plc and PZ Cussons Nigeria 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 gain.

PZ Cussons Plc-3.53%

• The share price of PZ Cussons Nig Plc, decreased by 53% during the period under review, from N8.50 per share to N8.20 per share, reducing the market capitalisation to a loss of N1.191.14 billion or 3.53% to close at N32.557.91 billion at the end of August 2022 from the opening figure of N33.749 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 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 has appreciated by 51.6% year-to-date, which currently trade at N25.

Nigerian Breweries Plc – 4.61%

• The shares of Nigerian Breweries witnessed a negative run during the month. The most capitalized brewery in Nigeria lost 4.61% in price in the month of August,  from N70 to N45.50. The company witnessed sell pressure that drove down the market capitalization to shave off N18.085 billion to stand at N374.051 billion at the close of trading on August 31, 2022, from a figure of N392.137 billion at the beginning of trading on August 1^st.
• 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 of 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 improved 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 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 N40, but has since lost 3.2% year-to-date.

International Breweries Plc – 6.54%

• The brewer lost 54% in share price during the month, from N5.35 to N5.00 per share. The company’s share price drop drove down its market capitalization by N9.401.73 billion to close at N134.310.34 billion at the close of trading on August 31, from an opening figure of  N143.712 billion at the beginning of trading on August 1.
• The half-year earnings for the company showed a turnover of N111.4 billion, which is a strong year-on-year growth of 36%.
• Administrative and marketing expenses however grew well ahead of sales revenue at 42% to N28.7 billion and claimed a good part of the gross profit.
• A drop of 78.8% in other expenses to N2.4 billion helped to lift operating results from a loss of N16.4 billion in the same period last year to an operating profit of N5.4 billion in the half year in June 2022.

Unilever Nigeria Plc-14.08%

• Shares of Unilever Nigeria Plc have also suffered from the market slide with a loss of 14.08% in price during the month, from N20 to N12.20. The negative activities drove down the market capitalization to lose N11.490.01 billion to close at N70.089.07 billion at the close of trading on August 31, 2022, from opening figure of N81.579.08 billion at the beginning of trading on August.
• Unilever Nigeria Plc recently released its unaudited financial statement for the half year ended 30 June 202
• 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 its 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 trade at N35 but had since lost 7.93% year-to-date.

Cadbury Nigeria Plc – 15.58%

• The share price of Cadbury Nig Plc, benefited from the market downturn dropping by 15.58% during the period under review, from N40 per share to N13.00 per share, causing the market capitalisation to lose N4.507.71 billion or 15.58% to close at N24.416.63 billion at the end of August 2022, from the opening figure of N28.924.34 billion on August 1.
• 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 N516 million in H1 2021, to N2.34 billion in H1 2022. The Company’s basic earnings 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, 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 trade at N00 and year-to-date has appreciated by 47.7%.

Source: Nairametrics.com