₦airaland Forum

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Private Ori Megidish, an IDF soldier, was rescued during the IDF’s operation in Gaza on Sunday night, the IDF and Shin Bet said in a joint statement on Monday.

She was kidnapped by the Hamas terrorists on October 7 and has now been reunited with her family.

A subsequent medical examination administered to Megidish has determined that she is healthy.

The statement noted that the IDF and Shin bet will continue to make every effort to secure the freedom of the remaining hostages.

Celebrations erupted around Megidish’s house in the southern Israeli city of Kiryat Gat. A crowd gathered around the residence and neighbors and revelers sang songs and set off fireworks.

“It’s like another birth,” Israeli media quoted a neighbor of the family, Itamar Trobek, as saying. “We are very happy. We saw the family, they weren’t the same as yesterday. We prayed a lot.”

https://moneycentral.com.ng/markets/article/idf-rescues-female-soldier-held-hostage-by-hamas/

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Nigeria is planning to introduce new foreign exchange rules — including a crackdown on illegal currency trading — that it hopes will result in the naira appreciating to its fair value by year-end, 2023.

The government sees a “fair price” for the dollar at 650 to 750 naira, Taiwo Oyedele, chair of the presidential committee on fiscal policy and tax reforms, said in an interview with Bloomberg.

In the parallel market, the naira traded at 1,165 per dollar on Monday.

The government plans to clear a backlog of dollar demand estimated at about $6.7 billion, bolster the naira forward market, and set transparent rules for the operations of the official market, Oyedele said.

It also aims to expand the official market to include all legitimate transactions, while snuffing out the illicit “black market” for foreign currency, he said.

“We think all of that will happen before December, and maybe in a matter of a couple of weeks we will begin to see the results, such that before the end of the calendar year, naira should find its true value, not the one that is being done currently in the parallel market,” Oyedele said.

https://moneycentral.com.ng/exclusive/article/naira-to-reach-fair-value-of-750-by-year-end-2023-oyedele/

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Nigeria announced this week that it expects to receive $10 billion of inflows of which $7.0 billion is expected from NNPC’s forward sales and $3.0 billion from Qatar, according to a research note by Cardinal Stone Partners.

The inflows will help ease a liquidity crunch weighing on the naira.

The government has a “line of sight” on the inflows into the country “in weeks rather than months,” Finance Minister Wale Edun said at the Nigerian Economic Summit in the capital, Abuja, on Monday.

President Bola Tinubu’s government has been struggling to stem the decline in the currency. The inflows will add to other steps being taken by the government to boost foreign-exchange liquidity, including improving market transparency and allowing domestic entities to issue foreign-exchange instruments, Edun said.

Further out, given that both the fiscal and monetary authorities have shown commitment to improving the FX liquidity in the country, upside potential for the naira might be in the offing in the near to medium term, Cardinal Stone Partners said.

“For context, the government plans to raise $10.0 billion, The expected inflows could be higher if the government can obtain the $3.0 billion Afrexim bank loan and can get the World Bank facility of $5.0 billion ($3.5 billion for project development and $1.5 billion to support key policy reforms),” the research firm said.

https://moneycentral.com.ng/exclusive/article/qatar-nnpcl-to-provide-nigerias-expected-10-billion-inflow/

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Two US fighter jets struck weapons and ammunition facilities in Syria on Friday in retaliation for attacks on US forces by Iranian-backed militia as concerns grew that the Israel-Hamas conflict may spread in the Middle East.

US President Joe Biden ordered strikes on the two facilities used by Iran’s Revolutionary Guard Corps and militia it backs, the Pentagon said, warning the US will take additional measures if attacks by Iran’s proxies continue.

US and coalition troops have been attacked at least 19 times in Iraq and in Syria by Iran-backed forces in the past week. Hamas, Islamic Jihad and Lebanon’s Hezbollah are all backed by Tehran.

Iranian Foreign Minister Hossein Amirabdollahian said at the United Nations on Thursday that if Israel’s offensive against Hamas did not stop, the United States will “not be spared from this fire.”

The US air strikes took place at roughly 4:30 a.m. on Friday in Syria (0130 GMT) near Abu Kamal, a Syrian town on the border with Iraq, and were carried out by two F-16 fighter jets using precision munitions, a US defense official said.

“These precision self-defense strikes are a response to a series of ongoing and mostly unsuccessful attacks against US personnel in Iraq and Syria by Iranian-backed militia groups that began on October 17,” US Defense Secretary Lloyd Austin said in a statement.

“These Iranian-backed attacks against US forces are unacceptable and must stop,” Austin said.

Biden has sent a rare message to Iranian Supreme Leader Ayatollah Ali Khamenei warning Tehran against targeting US personnel in the Middle East, the White House said earlier on Thursday.

“What we want is for Iran to take very specific actions, to direct its militias and proxies to stand down,” a senior US defense official said. The United States did not coordinate the air strikes with Israel, the official added.

Israel said on Friday military raids into Gaza were preparing “the next stage of the operation,” amid fears that a ground invasion of the Palestinian enclave could spark a wider Middle East conflict.

https://moneycentral.com.ng/markets/article/us-jets-bomb-syria-after-attacks-by-iran-backed-militia/

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Access Bank South Africa, Kenya and Mozambique all subsidiaries of Nigeria based Access Holdings made losses for the third quarter (Q3) period to September, 2023, up from only 2 (South Africa and Guinea) bank subsidiaries a year ago.

Access Holdings, which has been expanding its banking services across the African continent at a breakneck pace, saw three (3) is dealing with increased operating expenses for the African subsidiaries.

Access Bank South Africa had the biggest loss of N3.618 billion, followed by Access Bank Kenya with N261 million and Access Bank Mozambique with N7 million, data from the financials seen by MoneyCentral shows.

The reported losses were largely due to huge operating expenses which swallowed up most of the operating income.

Operating expenses for South Africa rose by 8.5% to N10.09 billion on a year-on-year basis.

The South African bank subsidiary is the 8-th largest for Access holdings with N233.8 billion in assets.

https://moneycentral.com.ng/exclusive/article/access-bank-south-africa-kenya-mozambique-report-loss-in-q3/

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Dangote’s fertiliser which operates a natural gas based granulated urea fertiliser manufacturing plant, was hit by gas pressure and supply interruption leading to low capacity utilisation rates of 32% in 2022.

However, utilization is expected to gradually improve to 72% by 2025, according to Fitch.

Sale of urea will be mostly geared towards exports to Africa, North America and Latin America, targeting 75% of production, with the balance to be sold locally.

The fertiliser business began operations in 2021 for Line 1 and Line 2 began in 2022. Dangote Fertiliser comprises of two 4,000 tons per day (TPD) urea production lines, positioning the Dangote Group as a leading manufacturer of urea fertiliser globally.

Dangote fertiliser contributed 17% to Dangote Industries Limited’s (DIL) consolidated EBITDA in 2022.

https://moneycentral.com.ng/markets/article/dangote-fertiliser-output-slumps-to-32-on-low-gas-supply/

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MTN Nigeria is set to build a new office tower in upscale Eko Atlantic City, a new district in Lagos, to serve as its headquarters in the country, according to information seen by MoneyCentral.

MTN which is Nigeria’s largest telecommunications company had earlier announced, its desire to plant deeper and more permanent roots in Nigeria.

“We have initiated plans to commission a purpose-built, state of the art MTN Head Office, designed to act as a central hub for our network, a catalyst for creativity and innovation, and a showcase for the flexible working structures that are driving efficiency gains in this new normal working environment,” MTN said.

Aligned with wider commitment to environmental sustainability, MTN said the head office will meet the highest global environmental standards, demonstrating the role of green technology in our future.

The new office building will be an 18 stories sustainable tower designed to respond to the environment and improve air oxidization in a calm working environment, according to its architects.

[url]https://moneycentral.com.ng/markets/article/mtn-nigeria-to-build-new-office-tower-in-eko-atlantic-city/
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Two female students of Kwara State Polytechnic, Joseph Joy Adanma and Vandora Oreoluwa Favour, have disclosed how they killed a nightclub owner, Adeniyi Ojo, during a sexcapade, in Ilorin, the state capital.

Speaking after they were paraded at the police Force headquarters in Abuja on Wednesday, October 11, 2023, Adanma revealed that they, during a sex romp, tied Ojo, the son of Chief Emmanuel Ojo, a prominent figure in Ilorin, to a hotel bed, stole his phones, and other belongings, and killed him.

Adanma disclosed that they attempted to steal from the deceased who wanted to have sex with her and her friend, Favour, but in the process, the man died.

She said she worked for the deceased in his nightclub for about three months in 2022 until the club was shut down by the government, marking the beginning of their relationship.

The suspect said she got her friend involved in the attempt to steal from Ojo when he requested to have sex with her.

The suspect disclosed that the initial idea was to lure him to have sex with them in his car, on the belief that they would find money in the car.

She however said they eventually ended up in a room where they tied the deceased on the pretense of having a sex rump, adding that when the deceased attempted to shout, they covered his mouth with a pillow.

The student further revealed that they attempted to drug the nightclub owner but failed in their bid.

Adanma, however, stated that they didn’t know that the man was dead when they left with his phone, saying they thought he was pretending to be asleep.

Speaking during their parade, the Force Public Relations Officer, ACP Olumuyiwa Adejobi, said: “On October 6, police operatives apprehended the two suspects, Adanma and Favour, who are both students of Kwara State Polytechnic for their involvement in the robbery and murder of Mr. Ojo.

“Through meticulous investigative work, our officers were able to track and apprehend these suspects in Mowe-Ibafo, Ogun State.

“In the tragic incident, the duo tied the deceased under the guise of having a sex rump and demanded money from him. But when he was not forthcoming, they resorted to drugging and suffocating him, leading to his untimely demise.

“They have been processed and will be charged to court shortly.”

See Video below:


[url]https://moneycentral.com.ng/news-for-you/article/video-how-we-killed-club-owner-in-sexcapade-%e2%80%95-students/[/url]

Nigeria Central Bank should go and learn how to build its dollar reserves

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The Bank of Israel will sell foreign exchange for the first time since it allowed the shekel to trade freely as part of an unprecedented program to support markets following Saturday’s surprise attack by Hamas militants.

The central bank will sell as much as $30 billion and extend up to $15 billion through swap mechanisms, according to a statement on Monday.

The goal of operating in the market during the coming period is to smooth out volatility in the shekel’s exchange rate and provide the necessary liquidity, it said.

After having long been concerned about the shekel’s excessive appreciation, the Bank of Israel’s intervention marks a reversal and is meant to prevent the currency from falling. The move follows the deadliest attack on Israel in decades, with Prime Minister Benjamin Netanyahu saying the war with Hamas militants in the Gaza Strip will be lengthy and “difficult.”

Israel’s currency slid to a session low despite the intervention, after briefly erasing losses. The currency fell 2.2% to 3.9246 against the dollar as of 11:30 a.m. local time, the weakest since 2016.

The country’s benchmark TA-35 stock index fell 0.3%, extending a 6.5% drop from Sunday. Stock markets across the Middle East fell amid concerns the war might escalate into a broader conflict, with Dubai’s benchmark gauge losing 2.8%.

https://moneycentral.com.ng/markets/article/shekel-gets-45-billion-bank-of-israel-support-after-attack/

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NPF Pensions Managers, Pensions Alliance Limited (PAL) Pensions and Access Pensions are the best performing Pension Funds this year, even as most Pension Fund Administrators (PFAs) missed out on the spectacular rally in equities, so far in 2023.

NPF Pensions fund price has gained 17% year-to-date (YTD), followed by PAL Pensions up 16.34% and Access Pensions Limited up 13.54%, according to retirement savings account or RSA Fund II data compiled by MoneyCentral (see table).

The RSA Fund 2 is the default fund under the Multi-fund structure for RSA holders who are below 50 years old.

The top 3 performing funds also had the highest asset allocation to domestic equities with NPF at 23.65%, PAL at 17.87% and Access Pensions at 11.21% as at September 2023.

This compares to the average exposure to domestic equities by Pension Funds of 7.84% of total assets as at July 2023, according to the latest PENCOM data.

Nigeria’s broad stock market index has gained 29.52% year to date.

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Premium Pension Limited is in fourth position returning 12.64% year to date, FCMB Pensions Limited is next with 12.21%, TangerineApt Pensions Limited 12%, CrusaderSterling Pensions Limited 11.94%, ARM Pension Managers 11.71%, Trustfund Pensions Limited 11.61% and Leadway Pensure PFA Limited 11.58% to make up the top 10.

Most fund managers still underperforming inflation

Despite the double digit gain, most Pension fund managers are underperforming inflation, when RSA returns are juxtaposed with rising headline inflation, reinforcing the negative real returns on Naira-denominated assets, a risk which continues to discourage savers and investors in Naira-denominated financial assets.

Whilst the best performing NPF Pensions fund price has gained 17% year-to-date, headline inflation printed at 25.8% in August, a more than 18-year high, thus reinforcing the negative return on Naira-denominated assets.

The impact of a negative real return is particularly harsh on pension and life insurance funds, given that the opportunity cost of a negative real return is perhaps the highest for these class of investors.

For Retiree Savings Accounts (RSAs), the negative real return translates to lower pay-out to pensioners, thus implicitly reducing their standard of living.

Given that annuity payments are fixed, the opportunity cost of a low interest rate environment is borne by the life insurance firm, resulting in major underwriting losses for most life insurance firms whilst also making new annuity offerings less attractive to new clients.

https://moneycentral.com.ng/markets/article/npf-pal-access-pensions-have-best-returns-as-pfas-miss-equity-gains/

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Unity Bank a mid-tier Nigerian lender saw its woes deepen in the first six months (H1) of 2023, as it recorded a massive loss of N38.86 billion for the period.

The bank is also technically insolvent as it had negative shareholder funds or total equity of –N178.82 billion as at June 2023.

While gross revenues of N27.75 billion were flat compared to 2022 levels, Unity Bank was hit by higher interest expense and humongous Foreign Exchange (FX) revaluation loss of N35.4 billion.

Nigerian companies have been hit by a 40% devaluation of the currency after newly elected President Bola Tinubu moved to a more market friendly set of reforms, however banks that are positioned net long the dollar have booked FX gains.

The FX losses booked by Unity Bank suggests it was positioned net short (FX liability), per the dollar, banking sources told MoneyCentral.

Unity Bank stock has gained 143% year to date, closing at N1.34 per share in Friday’s trading.

The Unity Bank Board says it expects that; “barring unforeseen circumstances, the results would improve materially following initiatives already set in motion.”

MoneyCentral expects market direction of the stock in Monday’s trading session to determine if investors retain confidence in the Board’s pronouncement.

https://moneycentral.com.ng/markets/article/technically-insolvent-unity-bank-reports-n38-86bn-loss-in-h1/

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Changshan County, located in the eastern Chinese province of Zhejiang, is now offering cash “rewards” to couples for brides aged 25 or younger.

The reward of 1,000 yuan (some $137) is supposed to encourage more young people to get married.

The rewards system was announced on the official WeChat account of the county last week. The measure is ostensibly meant to promote “age-appropriate marriage and childbearing” for first marriages.

The system, however, does not offer any requirements for the grooms of newlywed couples. Apart from the cash lump sum, the county is now offering a series of subsidies on childcare and education for young couples who have children.

The announcement comes as China marked its first population decline in six decades, with the National Bureau of Statistics China reporting last January a drop in around 850,000 people for a population of over 1.41 billion in 2022. The drop is the first one on record since 1961 – the last year of China’s Great Famine.

Earlier this month, China also reported an alarming drop in fertility rates, which reached a record low of 1.09 last year, according to figures from China’s Population and Development Research Center.

The figure puts China at the lowest fertility level among countries with a population of more than 100 million, as well as among the world’s lowest altogether, such as South Korea and Singapore.

https://moneycentral.com.ng/news-for-you/article/chinese-region-offers-rewards-for-brides-under-25/

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The sales price of Dangote Cement is 17.22% cheaper on average when compared to prices set by global cement manufacturing giants from Cemex of Mexico to Holcim in Europe, research by MoneyCentral shows.

The data suggests any opening up of borders to importation will not lead to lower prices but would decimate local manufacturing jobs.

MoneyCentral looked at financial data from six of the world’s largest cement manufacturers from 5 continents: including Cemex of Mexico/USA, Dangote Cement of Nigeria, Holcim Ltd based in Europe, Anhui Conch of China, Votorantim Cimentos of Brasil and UltraTech Cement Limited India.

It showed an average sales price during 2022 for cement of $90.61 per metric ton for the group. This compares with Dangote Cement which sold its cement 17.22% cheaper at an average of $75 per metric ton (see chart).

However when compared to global cement manufacturing peers, Dangote Cement is at a disadvantage in nearly all metrics that is vital to profitable cement manufacturing, including finance costs, inflation, cement volumes and sales price.

The only major advantage MoneyCentral saw for Dangote Cement was lower energy costs and efficiency of cement plants due to its investment in newer and more energy efficient plants across Africa.

Some of the global peers such as Holcim have domestic subsidiaries in Dangote Cements operating locations, meaning the subsidiaries can tap the expertise, cheaper source of capital, of their global parent company, all while being in direct competition with Dangote Cement, a luxury Dangote Cement does not have.

Our thesis is simple: opening the floodgates of cement importation will not lower Nigeria Cement prices as the major global cement manufacturers currently sell their products at a price point higher than Dangote Cement.

It is however, more likely that given additional costs of shipping, port handling, demurrage, naira devaluation and haulage from ports on the coast to the hinterlands, prices will rise steeply just as we currently see with petrol, another fully imported commodity.

However there would be lost jobs, lower taxes for the Federal Government (FG), negative impact on the domestic stock market, less innovation and lost manufacturing activity in the country if unbridled importation were to occur.

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Source: MoneyCentral Research, Company Financials
Cemex (Mexico, USA)

Cemex average sales price for cement during 2022 was $114.30 per metric ton.

For the year ended December 31, 2022, Cemex had net sales of $15.6 billion, which were higher than those for the year ended December 31, 2021, mainly driven by price increases across its products and services in all of the regions where it operated from.

During 2022, Cemex pricing and cost mitigation efforts were able to offset much of the impact of inflation.

“As of December 31, 2022, 77% of our total debt plus other financial obligations was Dollar denominated, 13% was Euro-denominated, 2% was Pound Sterling-denominated, 5% was Mexican Peso denominated, 2% was Philippine Peso-denominated and 1% was denominated in other currencies,” Cemex said in its financials.

Chief Financial Officer Maher Al-Haffar said the company would keep pushing forward with price increases in 2023.

“More than 80% of our volume is being repriced in the early part of the year and we think there is very good traction,” Al-Haffar said in a call with analysts earlier in the year.

Takeaway: Cemex raised prices in 2022, to mitigate impact of inflation and will continue to raise prices this year.

Dangote Cement also can’t afford cheaper USD financing like Cemex due to extreme volatility of Naira vs dollar, such mismatch is risky because it will need to service dollar debt with revenues generated in Naira which becomes much more expensive in the event of a devaluation.

Cemex sold 63.4 million metric tons of cement in 2022.

Dangote Cement (Nigeria, Africa)

Dangote Cement’s average sales price for cement during 2022 was $75.5 per metric ton.

In 2022, Ethiopia one of Dangote Cements geographic locations of operations showed characteristics which indicates the existence of hyperinflation.

Dangote Industries (Ethiopia) Plc is one of the subsidiaries of Dangote Cement Plc and accounts for ₦103.3 billion (6%), ₦33.3 billion (6%) and ₦270.6 billion (10%) of the Group’s revenue, profit before tax and total assets respectively.

Takeaway: Dangote Cement deals with high inflation not just in Nigeria but in rest of Africa

The only variable it controls is efficiency as macro variables such as inflation, interest rates, energy costs, and even pricing (due to competition) is largely outside its control. Cost of sales as a percentage of revenue is lowest for Dangote Cement due to massive investment in brand new plants across Africa (see chart).

However, the firm has one of the lowest prices, combined with the highest inflation and finance costs among the peers.

Average sales price during 2022 for Dangote cement was N58,282 per metric ton or $75.5 per metric ton, when using the most recent I&E rate of N772/$.

Dangote Cement sold 27.76 million metric tons of cement in 2022.

Holcim (Switzerland, Europe)

Holcim average sales price for cement during 2022 was $96.87 per metric ton.

The harmonised index of consumer prices (HICP) rose to 9.2% in 2022 for the EU, compared to 2021’s annual value of 2.9%.

The EU Innovation Fund granted Holcim two awards for carbon capture projects in Germany and Poland, for a total of EUR 328 million.

Net sales reached a record CHF 29,189 million for the full year of 2022, up by 12.9 percent on....
https://moneycentral.com.ng/markets/article/dangote-cement-prices-17-cheaper-than-global-average-data-shows/

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Niger’s military leadership expelled the French, German and Nigerian ambassadors just as talks to restore democracy between the West African nation and its regional partners were making progress.

France’s ambassador Sylvain Itte was asked to leave the country in 48 hours after failing to honor summons to respond to questions about actions contrary to Niger’s interests, the foreign ministry said in a statement.

Ambassadors from Germany and Nigeria were also given 48 hours to leave, according to separate statements.

France rejected the junta’s orders saying its ambassador would stay in the country as the junta doesn’t have the authority to make the demand.

France’s ambassador was accredited by the foreign ministry under ousted President Mohamed Bazoum, Niger’s Foreign Minister Hassoumi Massoudou said in a post on X, formerly known as Twitter, on Friday.

France has previously said it supports all actions by the Economic Community of West African States to restore democracy in Niger. Nigeria’s President Bola Tinubu has taken the lead, preparing for a regional military intervention.

The latest development comes as the junta – facing regional and international pressure, has refused to relinquish power and release Bazoum.

Ecowas on Friday reiterated its readiness to use military action to overturn the July 26 coup if dialog fails.

All options are on the table, including the use of force, Omar Alieu Touray, the president of the Ecowas Commission, told reporters in Abuja, Nigeria’s capital.

https://moneycentral.com.ng/exclusive/article/niger-military-junta-expels-nigerian-french-and-german-ambassadors/

The Norwegian Government Pension Fund is still the world's largest sovereign wealth fund (SWF). According to data from Global SFW, the fund's assets under management amount to $1.38 trillion, narrowly exceeding the $1.35 trillion in assets under management from the Chinese Investment Corporation.

Data from the Global SFW shows the world's largest sovereign wealth funds are located in Asia and the Arab world, with Norway the only, albeit notable exception.

The unique Norwegian fund was set up to invest government revenues from its vast oil and natural gas reserves into sectors deemed more sustainable in order to provide for a future when the country can no longer rely on its income from fossil fuels.

The Norwegian government is free to use up to three percent of the fund's volume annually for social purposes – that number currently amounts to roughly $40 billion.

The top six SWF ranked by Assets Under Management (AuM), are: Norway, China CIC, UAE-Abu Dhabi, China SAFE IC, Kuwait KIA, Singapore GIC.

Saudi Arabia's Public Investment Fund (PIF), which is seventh on the list and has made a lot of headlines recently due to its significant investments in golf and football, released its 2022 annual report on Sunday, providing the public with a glimpse into the operations of one of the world's largest sovereign wealth funds.

At the end of 2022, the PIF's assets under management amounted to roughly $600 billion - a figure that has since grown to $700 billion according to Global SWF, a company tracking sovereign wealth funds.

While gaining more international attention due to its investments in sports, the PIF actually reduced its international strategic investments last year, with their share of total assets under management dropping from 20 to 10 percent, while domestic investments accounted for 77 percent of AuM at the end of the year.

Often accused of "sportswashing", the PIF is very clear about the purpose of its international investments in its annual report.

Among other things, the fund's strategic international investments are meant to "establish strategic relationships and partnerships with innovative companies, investment managers, and influential investors to allow Saudi Arabia to extend its global reach and influence", to "bolster Saudi Arabia’s position on the world stage as a leader and enabler of the future global economy" and to "support government-to-government relationships."

Nigeria's SWF managed by the Nigeria Sovereign Investment Authority or NSIA was ranked 73rd on the list with total assets at year end 2022 standing at N1.032 trillion or $2.29 billion.

Nigeria is vying neck-to-neck with Angola and Colombia for the position.

https://moneycentral.com.ng/markets/article/norway-remains-worlds-largest-swf-as-nigeria-ranks-73/

The Central Bank of Nigeria (CBN) held 21.38 tons of Gold reserves valued at $1.25 billion at the end of 2022, according to its recently released annual financial statement.

The Gold bullion is a monetary gold which consist of 687,402 troy ounces or about 21.38 tons of gold at the indicative market price of USD1824.02 per ounce.

Monetary gold is gold to which the Bank as a monetary authority has title to and is held as a reserve asset.

The CBN stash of Gold Reserves remained the same compared to 2021 levels. Heightened geopolitical and economic uncertainty have pushed central banks to diversify their reserves.

The World Gold Council expects central banks to keep adding to their holdings, although at a slower pace than last year when demand surged after the US sanctioned Russia’s reserves following its invasion of Ukraine.

https://moneycentral.com.ng/markets/article/nigeria-central-bank-held-21-38-tons-of-gold-reserves-valued-at-1-25-billion/

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Aminu Umar-Sadiq, Managing Director/Chief Executive Officer, NSIA


…plus the good, bad and ugly

The Future Generation Fund (FGF), the largest component of funds by assets managed by the Nigeria Sovereign Investment Authority (NSIA), recorded a sizable loss according to its 2022 annual report, a sign that all may not be well with the asset allocation strategy of the Sovereign Wealth Fund.

Losses for the FGF came in at N18.93 billion in 2022, largely as a result of a humongous N41.13 billion net loss on financial assets, as fair value loss on private equity, hedge funds and other securities came in at N32.15 billion.

Meanwhile, for the NSIA as a whole while personnel expense was kept in check as it was down 3%, general and administrative expenses jumped 77.3% to N1.6 billion, while travel expenses increased by 155% to N478.2 million, compared to 2021 levels.

The Future Generation Fund (FGF) is one of three funds managed by the NSIA and was set up to “invest in a diversified portfolio of appropriate growth investments in order to provide future generation of Nigerians a solid savings base for such a time as the hydrocarbon reserves in Nigeria are exhausted.”

Because the fund uses a plethora of active global asset managers (up to 49 different fund managers were counted by MoneyCentral from Goldman Sachs to obscure names like Edgbaston Investment Partners), instead of a simplified index fund or Exchange Traded Fund (ETF), strategy to gain exposure to global markets, it paid higher investment management fees, despite the poor performance.

Investment management fees for the FGF came in at N1.416 billion for the 2022 period, up 19% when compared to the 2021 period.

Operating and administrative expenses for the FGF also surged by 195% to N2.92 billion, despite the loss.

The FGF assets stood at N595.97 billion as at year-end 2022, compared with N374.8 billion for the Nigeria Infrastructure Fund and N60.93 billion for the Stabilisation Fund.

Total assets managed by the NSIA at year end 2022 stood at N1.032 trillion or $2.29 billion (Effective FX closing rate as at 31 December 2022 was N448.55/ US Dollar).

NSIAs Total comprehensive income of N96.96 billion for the year 2022, was down -34%, compared to 2021 levels.

Other highlights from the NSIA 2022 Annual Financial report

The Good: Profit from investments in FMCU, AKTH & LUTH

The NSIA booked infrastructure operating revenue of N3.186 billion representing 100% of revenue which came from its healthcare facilities and profit up 58.3% to N2.26 billion in 2022.

Revenue from healthcare facilities represented revenue...

https://moneycentral.com.ng/exclusive/article/nsia-2022-annual-report-fgf-loses-n18-93bn-as-operating-travel-expense-jump/

Cornerstone Insurance Plc has benefitted from net exchange gain due to translation of foreign currency denominated assets that spurred a strong profit growth even amid rising claims and deteriorating underwriting results.

For the first six months through June 2023, Cornerstone Insurance’s net income surged by 3,556 percent to N11.25 billion from N408.12 million As at June 2022, the highest uptick at the bottom line (profit) in over a decade.

The surge was driven by a foreign exchange gains of N12.77 billion in the period under review as a weak Naira was a boon for the insurer as there were increases in foreign currency denominated assets

However, there were weaknesses at the underwriting level due to mounting obligations to policyholders. A stubbornly high inflation means the replacement cost of assets from vehicles to buildings has been spiking.

For instance, claims expenses surged by 166.25 percent to N4.26 billion in June 2023 from N1.60 billion the previous year.

That resulted in an underwriting loss of N1.22 billion from a profit position of N2.37 billion as of June 2023.

The insurer’s combined ratio deteriorated to 164.32 percent in June 2023 from 123.95 percent in June 2022, according to MoneyCentral calculations.

The combined ratio is a measure of profitability used by an insurance company to gauge how well it is performing in its daily operations. It is typically expressed as a percentage.

A ratio below 100 percent indicates that the company is making an underwriting profit, while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums.

The insurer’s physical and digital channels have been expanding and contributing to top line (sales) growth as all business segments are also contributing to earnings growth.

Gross premium written (GPW) spiked by 42.91 percent to N14.72 billion in June 2023 from N10.30 billion as at June 2022.

Gross premium income (GPI) was up 24.94 percent to N13.32 billion as at June 2023 from N10.66 billion the previous year.


https://moneycentral.com.ng/insurance/article/cornerstone-insurance-profit-surges-3555-on-n12-75bn-fair-value-gain/

Nigerian firms growing corporate debt loads are bumping up against aggressive interest rate hikes by the central bank seeking to tame inflation, meaning companies are paying higher interest expense on borrowings.

The corporate debt (a combination of short and long term obligation) stood at N6.29 trillion as at June 2023, which is 27.18 percent higher than 2022’s N4.92 trillion.

Companies have a variety of ways to finance their operations, including using their own earnings, issuing new equity, issuing bonds, or taking out loans. The composition of financing options that a company chooses matters, particularly during economic downturns.

While debt financing is advantageous because it is cheaper as it enjoys tax shield and it does not lead to ownership dilution, a deteriorating cash flow that is not able to cover interest obligation might lead to bankruptcy.

Of course, a low interest rate environment that started in 2020 fueled by central bankers slashing of monetary policy rate to spur growth during the coronavirus pandemic spurred companies to tap the debt market to fund their working capital requirement and expansion plans.

But the interest that these firms will be paying to service the debt has been rising since the first quarter of 2022 when the central bank began its tightening campaign to rein in  inflation exacerbated by the Russia and Ukraine war that sent commodities and grains prices higher.

The total finance costs of non-financial firms surged by 127.44 percent to N621.30 billion as at June 2023, according to data gathered by MoneyCentral.

Nigeria 10 year bond yield was 13.22 percent on Friday August 4, according to over-the-counter interbank yield quotes for this government bond maturity.

It is worth noting that yields were as low as 4.29 percent as of October 26, 2020.

The monetary policy committee of the central bank raised its benchmark rate to a record 18.75 percent at its last meeting from 18.5 percent.

Nigeria’s inflation rate rose to 22.79 percent in the month of June 2023, representing a 0.38 percent increase from 22.41% recorded in the previous month.

The balance sheet of most companies are healthy even amid higher costs as they have enough operating profit to absorb finance cost and still remain profitable in the face of foreign exchange losses brought on by incessant currency devaluation.

The median interest coverage ratio for Nigerian companies stood at 30 at June 2023, substantially higher than last year’s 21.44, according to data from MoneyCentral.

The figure is a measure of a company's ability to repay its debts, with a ratio of at least 2 generally considered the minimum acceptable amount for a company with solid revenues. Analysts typically prefer a coverage ratio of 3 or higher.

Analysts say with the reinvigorated bullish sentiment in the equity market, corporates would seek to take advantage of the renewed hope for capital raising in both the equity and debt markets.

However, they added that expectations of a lower interest rate environment in the near to medium term suggests that most corporates would delay tapping the debt capital market to avoid locking in a high cost on long term debt, thus financing Capex programmes through relatively shorter term bank loans of say one year.

“Indeed, I see prospects for gradual renewal of interest in the primary segment of the equity capital market over the next few quarters, as new valuation in the secondary market provides some excitement for issuers to tap seasoned or new equity capital raising opportunities in the capital market,” said Abiola Rasaq former Economist and Head, Investor Relations for United Bank for Africa (UBA).

“So, the corporate financing outlook should be a blend of debt and equity, as both segments of the market begin to open up. The right blend of both capital options would be dependent on the sector, the stage of the company in contest and the type of projects each company is seeking to finance, amongst other factors relevant to the assessment of the capital structure of the respective issuers,” said Abiola.

Issuances of commercial papers (CPs) have risen sharply year on year by 57.80 percent due to heavy fundraising by companies that seek to meet their working capital requirements and fund future expansion plans.

The amount raised by firms spiked by 57.80 percent to N786.59 billion in June 2023 from N498.50 billion as at June 2022, according to data gathered by Afrinvest Securities.

Of course, the number of issuances followed the same growth trajectory as it moved to 104 in June 2023 from 55.

“The short-dated nature of CPs provided comfort for issuers to refinance and raise new capital while navigating uncertainty in the period,” said analysts at Afrinvest Securities Limited.

https://moneycentral.com.ng/exclusive/article/corporate-debt-surges-to-over-n6trn-as-interest-expense-spikes/

The Nigeria Sovereign Investment Authority (NSIA) has failed to make public its annual report for the 2022 financial year, some 8-month into the new year.

A one-page abridged financial statement was released on its website showing the NSIA which manages Nigeria’s Sovereign Wealth Fund (SWF) with assets of $2.3 billion, saw it profit fall -33.3% in 2022.

Net gain on financial assets fell by 97% between 2021 and 2022, leading to the slide in profit.

NSIA total assets (Group) fell to N1.032 trillion or $2.22 billion, from N1.227 trillion ($2.64 billion) in 2021.

The summary one-page financial statement do not contain all the disclosures required by the International Financial Reporting Standards, the NSIA and the Financial Reporting Council of Nigeria, according to PricewaterhouseCoopers (PwC) the audtors.

“Therefore, reading the summary financial statements and the auditor’s report thereon, is not a substitute for reading the audited financial statements and the auditor’s report thereon,” PwC said.

Read More: https://moneycentral.com.ng/markets/article/nsia-fails-to-release-annual-report-8-months-into-new-year/

Consolidated Hallmark Insurance (CHI) Plc has reported a rise in pre-tax profit of 103.64 percent to N1.57 billion for the second quarter of 2023, even amid elevated costs as the insurer continues to build its momentum while delivering outstanding financial results.

The insurer’s net income spiked by 74.30 percent to N989.60 million in June 2023, which is attributed to interest revenue and fair value gain on financial assets.

Direct premium revenue also increased in the quarter, to N9.47 billion.9 billion in 2023 from N6.60 billion, driven by growth all business segment.

The company’s ability to continue to grow, manage volatility and improve profitability reflects its commitment to underwriting and operational excellence.

Eddie Efekoha CEO at Consolidated Hallmark Insurance Plc Nigeria, said that the growth recorded in the Group’s bottom line reflected the prudent measures taken to increase shareholder value.

He assured its investors and other stakeholders that efforts would continually be focused on creating more value for its numerous investors and stakeholders.

It paid N3.72 billion in claims to policyholders, which represents an 8.14 pe4cent reduction from 2022’s N4.05 billion.

About Consolidated Hallmark

Consolidated Hallmark Insurance Plc is a Nigeria-based general business insurance company. The Company’s segments include General & Micro Life Insurance Business & HMO and Finance and support services.

The General & Micro Life Insurance Business & HMO segment provides cover for indemnifying customers’ properties, and compensation for other parties that have suffered damage as a result of customers’ accidents.



https://moneycentral.com.ng/exclusive/article/consolidated-hallmark-reports-solid-q2-despite-elevated-costs/

By Patrick Atuanya

AXA Mansard Plc has benefitted from fair value gains on bond portfolios that impetus profit as the insurer overcomes an unfavorable underwriting environment.

For the first six months through June 2023, AXA Mansard’s net income surged by 582.26 percent to N13.12 billion from N1.92 billion as at June 2022.

The growth at the bottom line (profit) was largely driven by N11.13 billion net gain or loss on financial assets at fair value through profit or loss.

Of course, the improvement in earnings is good tidings for shareholders who awaits bumper dividend at the end of the year, but that depends if the company maintains the growth momentum

AXA Mansard has a year-to-date (YTD) of 87 percent, outperforming the NGXASI index of 25.53 percent as it is enjoying the recent stock rally propelled by the market friendly policies of president Bola Tinubu.

The company posted N54.77 billion in gross premium written (GPW) as at June 2023, which is 21.81 percent higher than 2022’s N44.96 billion.

A breakdown of premium income shows revenue from the Life segment increased by 19.97 percent to N10.69 billion in June 2023 while sales from Non-Life business was up 19 percent to N22.80 billion.

It generated N21.27 billion from AXA Mansard Health (HMO) as at June 2023, which is 25.93 percent higher than 2022’s N16.89 billion as at June 2022.

Claims expenses were up 35.68 percent to N19.77 billion in the period under review from N14.57 billion the previous year.

While most insurers have recorded growth in earnings as investors continue to pile into stocks, industry contribution to the economy is discouragingly disappointing.

The reasons for the low penetration are: Lack of confidence for the claims process, cultural and religious beliefs, and weak macroeconomic conditions.

Taking up a cover in a country where over 50 percent of a population of 200 million live on less than 1.98 percent a day is off the table of most Nigerians who are struggling to survive.

Insurance sector’s growth fell by 7.25 per cent in the first quarter of 2023, National Bureau of Statistics (NBS) has said.

The NBS in its ‘Nigeria Gross Domestic Product Q1, 2023’ said the finance and insurance sector consists of two sub sectors which are financial institutions and insurance.

https://moneycentral.com.ng/markets/article/axa-mansard-profit-surges-582-26-on-foreign-exchange-gains/

By Bala Augie.

BUA Foods Plc, a firm that lists on “the exchange” NGX on January 5, 2022, has overtaken Nestle Nigeria to become the most profitable consumer goods firms in Africa's largest economy.

For instance, BUA foods posted net profit of N95.18 billion as at June 2023 as the profit surged by 142.21 percent.

That compares with the net income of N2.76 billion; Vitafoam, (N3.69 billion); Flour Mills of Nigeria, (N10.18 billion); PZ Cussons N15.35 billion); Dangote Sugar-March figure-(N12.80 billion), and Nascon, (N5.82 billion).

Firms such as Nestle Nigeria, recorded loss after tax of (-N49.98 billion); Cadbury, (-14.53 billion); Nigeria Breweries, (-N47.34 billion), and Guinness Nigeria, (-N18.16 billion) as they capitulated to foreign exchange losses brought on by the abrupt devaluation of the central bank.

BUA Foods’ shares have gained 108.15 percent so far this year, one of the best performers on the NGXASI index.

The managers of BUA Foods deserves a pat at the back for being proactive and averting a colossal damage to the company’s balance sheet and stock price.

Some analysts say the consumer goods giant sources most of its raw material locally, which makes it less susceptible to foreign exchange devaluation losses.

BUA Foods has five business divisions that are contributing to Group earnings: Sugar, Flour, Pasta, Rice, and edible oil. It has eight plants and the second largest Sugar refinery in Nigeria.

The company adopts a focus and market penetration strategy while keeping a tab on input. Aside from its raw material and foreign exchange sourcing dynamics, it deploys aggressive sales strategy to average  reduce cost per tone Middle-line cost optimisation as it uses Supply and delivery hedging on inputs and products.

As a result of cost controls and price adjustments, BUA Foods’ gross profit margin increased to 41.38 percent in June 2023 from 41.38 percent in June 2022.

Operating profit margin rose to 48.56 percent in June 2o23 from 27.11 percent the previous year.

Net profit margin moved to 27.74 percent in the period under review from 23.27 percent as at June 2022.

BUA Foods is effective in converting sales to cash as operating cash flow margin increased to 23.37 percent in the period under review from 12.68 percent the previous year.

Because of the company’s robust cash flow and strong balance sheet, its stock could be a safe haven as peer rivals' stocks will be beaten down on the back of poor earnings results.

With the Naira expected to continue its bad run till the first quarter of next year, companies with foreign exchange obligations will be booking huge foreign exchange losses that undermine earnings.

The naira was devalued in June 2023 (from 465 NGN/USD in May’23 to 752 NGN/USD in Jun’23).

It is glaring that the increase in transportation fares due to a spike in fuel price and the inevitable hike in utility bills means more issues for sector players who are the most vulnerable to macroeconomic shocks.

The NGXConsumer goods stocks has a year to date of 48.15 percent.

https://moneycentral.com.ng/markets/article/bua-foods-overtakes-nestle-to-become-most-profitable-consumer-goods-firm/

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Lindsay Shiver and husband

Lindsay Shiver, a Georgia mother of three and former pageant queen has been arrested in the Bahamas for allegedly plotting to kill her estranged husband, a former Auburn University football player, according to reports.

Shiver, 36, was caught when Bahamian police stumbled on her alleged scheme to murder hubby Robert Shiver, 38, while they were investigating a different case, Bahamas Court News reported.

Two men, Terrance Bethel, 28 — identified by the outlet as Lindsay Shiver’s lover — and Faron Newbold, were also arrested in the alleged hit scheme.

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Loverboy Terrance Bethel

Local police unearthed texts that detailed the plot while they searched the phone of a suspected burglar at Grabber’s Bar and Grill in Great Guana Cay in the Bahamas earlier this month.

It wasn’t immediately known whether Shiver, Bethel or Newbold owned the phone.

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The couple share three sons together


Robert and Lindsay Shiver own a house in the Bahamas, near where she met her alleged lover Bethel, a source familiar with the case told the Thomasville Times-Enterprise.

Robert Shiver, who was a snapper for the Auburn Tigers from 2006 to 2008, had filed for divorce when he learned his wife...

https://moneycentral.com.ng/lifestyle/article/lindsay-shiver-and-lover-arrested-in-bahamas-for-plotting-to-kill-husband/

MTN Nigeria posted a surprise slide in profit as net foreign exchange losses soared as a result of the recent devaluation of the naira.

The Central Bank of Nigeria (CBN) collapsed all FX windows into investors & exporters (I&E) window on 14 June 2023 to allow for a free float of the national currency against the dollar and other global currencies.

MTN Nigeria finance charge was impacted by the devaluation of the Naira from N461.10/$1 in December 2022 to N756.08/$1 in June 2023 which followed the policy change.

The largest telecommunication firm in Nigeria saw net foreign exchange loss jump by 865% to N131.45 billion in the six months period to June 2023.

This pushed MTN Nigeria profit for the period down 29% to N128.5 billion from N181.9 billion in June 2022. Earning Per Share fell to N6.33 from N8.95.

For investors the stock could be under pressure over the next 6-months as the full impact net foreign exchange loss is expected to kick-in in the second half (H2) of 2023, according to Karl Olutokun Toriola, Chief Executive Officer of MTN Nigeria.

"The exchange rate is adjusted based on the reference rate at the end of the preceding quarter for some of the contracts and the average rate in the quarter for others," Toriola said.

On a slightly positive note revenues rose by 21.96% to N1.158 trillion, while operating profit increased by 19.66% to N421.5 billion.

MTN Nigeria has announced it will pay an Interim Dividend of N5.60 per ordinary share to be paid to shareholders whose names appear in the Register as at the close of business on 16 August 2023.

https://moneycentral.com.ng/markets/article/mtn-nigeria-profit-slumps-as-fx-loss-jumps-865/

European football's governing body UEFA has banned Italian Serie A side Juventus from this season's Europa Conference League for breaching Financial Fair Play (FFP) rules.

UEFA has also fined Chelsea for breaching FFP rules as a result of "submitting incomplete financial information".

UEFA says the matter relates to transactions which took place between 2012 and 2019.

Juventus have been fined £17.14m, while Chelsea have been fined £8.57m.

The Italian club will only have to pay half of their fine if their financial records for the next three years comply with regulations, while Chelsea have already agreed to pay the settlement figure.

The Blues have spent around £600m on 19 new players since new owner Todd Boehly took charge of the club in May 2022, but their fine relates to a seven-year period while Roman Abramovich had control of the club.

UEFA said: "Following the club's sale in May 2022, the new ownership identified, and proactively reported to UEFA, instances of potentially incomplete financial reporting under the club's previous ownership."

The Italian Football Federation (FIGC) must now notify UEFA of which club will replace Juventus in the third-tier European competition. It is likely to be Fiorentina, who were beaten by West Ham in last year's final, after they finished eighth in Serie A.

The case against Juventus follows a 718,000 euro (£620,000) fine as part of a settlement agreement with Italian football authorities over a case concerning payment of player salaries.

Juventus had also been docked 10 Serie A points last season following a hearing into the club's past transfer dealings.

They were initially handed a 15-point penalty in January but Italy's highest sporting court overturned that decision in April and ordered the case to be re-examined.

They would have finished fourth and qualified for next season's Champions League had they not been sanctioned.

In response to the charge, Juventus said they accept UEFA's decision and will not be lodging an appeal.

Club president Gianluca Ferrero said: "We regret the decision of the UEFA. We do not share the interpretation that has been given of our defence, and we remain firmly convinced of the legitimacy of our actions and the validity of our arguments.

"However, we have decided not to appeal this judgment.

"Lodging an appeal, possibly to other levels of judgement, with uncertain outcomes and timing, would increase the uncertainty with respect to our eventual participation in the 2024/25 UEFA Champions League."

https://moneycentral.com.ng/sport/article/uefa-bans-juventus-from-europa-conference-league-for-breaching-ffp-rules/

Transnational Corporation Plc (Transcorp Group), Nigeria’s leading conglomerate with investments in Power, Hospitality and Energy sectors has announced reported its financial results for the first half of the year ended June 30, 2023, recording commendable growth across all its major indices.

The Group achieved an impressive revenue of N82.1 billion in H1 2023, compared to N62.9 billion in H1 2022, marking a substantial 31% growth year-on-year while operating income also grew by 46% to close at N29.9 billion as of June 2023, compared to N20.5 billion in June 2022.

The Group’s total revenue for the half year ended June 30, 2023, was N82.1 billion, compared to N62.9 billion in June 30 2022, signifying a 31% increase. Operating Income grew by 46% from N20.5 billion in June 2022 to N29.9 billion in June 2023.

Operating expenses for the period ended June 30, were N15.9 billion, an increase of 40% compared to N11.3 billion of the corresponding previous year.

In its financial report filed with the Nigerian Exchange (NGX), Transcorp reported an 39% growth in profit before tax to N18.5 billion in H1 2023, from N13.4 billion in H1 2022. Interest Cost declined by 9% to N6.6 billion in June 2023 from N6.1 billion in the same period under review.

Transcorp continues to maintain a strong balance sheet, with Total Assets rising to N495.3 billion, representing a 12% increase over the N442.7 billion recorded at the end of June 2022, due to the increase in Debt and equity securities (+61%) and Trade and Other Receivables (+40%) which cushioned the effect of the decline in Inventories (+68%).

Transcorp shareholders’ funds remained very strong at N176.3 billion up from N154.8 billion recorded in the same period in 2022, further reinforcing the company's commitment to delivering long-term value to its shareholders.

Commenting on the result, Transcorp’s President/Group Chief Executive Officer, Dr. (Mrs) Owen D. Omogiafo OON, mentioned that the Group continues to sustain growth and improvement, showing resilience despite, a challenging operating environment, characterised by foreign exchange volatility, gas supply constraints, and rising inflation, amongst others.

She said, "The first-half financial results affirm our dedication to driving innovation and seizing opportunities for sustainable growth, positioning Transcorp as a trailblazer in the Nigerian business realm.

In spite, of the challenging environment, our power businesses (Transcorp Power Limited & Transafam Power Limited) have sustained revenue growth increase by 32% and 30% respectively while our hospitality continues to outperform across all indices.

"We remain focused on efficiency, cost leadership, and meeting market demand to consistently deliver profitability and value to all our shareholders," asserted Dr Omogiafo

Transnational Corporation Plc (Transcorp Group) is a publicly quoted Conglomerate with a shareholder base of approximately 300,000. The Group's diverse portfolio comprises strategic investments in the Power, Hospitality, and Energy sectors. Among its notable businesses are Transcorp Hilton Abuja, Transcorp Hotels Calabar, Transcorp Power, Transafam Power, and Transcorp Energy.

#Transcorp

https://moneycentral.com.ng/markets/article/transcorp-continues-to-deliver-strong-performance-as-h1-2023-financials-show-sustained-growth/

Guinness Nigeria has reported a massive N18.1 billion loss for the year ended June 2023 as higher finance costs as a result of naira devaluation wiped out its operating profit.

Guinness recorded unrealised foreign exchange losses of N45.95 billion for the period, as exchange difference on foreign currency surged.

Exchange difference on foreign currency letter of credits surged to N19.6 billion, while exchange difference on foreign currency intercompany loan increased by 3,986% to N8.05 billion from N197.4 million in the earlier period.

Guinness Nigeria's loss on re-measurement of other foreign currency balances also jumped 1,753% to N21.44 billion in the period, from N1.157 billion in June 2020.

A foreign exchange gain/loss occurs when a company buys and/or sells goods and services in a foreign currency, and that currency fluctuates relative to their home currency.

The difference in the value of the foreign currency, when converted to the local currency of the seller, is called the exchange rate. If the value of the home currency increases after the conversion, the seller of the goods will have made a foreign currency gain.

However, if the value of the home currency declines after the conversion, the seller will have incurred a foreign exchange loss.

https://moneycentral.com.ng/markets/article/guinness-nigeria-reports-massive-n18-1bn-loss-on-naira-devaluation/

Nigerian Breweries Plc loss widened to N47.5 billion in the second quarter(Q2) of 2003 as the impact of foreign exchange (FX) volatility hit earnings.

The company had in the first quarter posted its first net loss in more than a decade.

Net revenues rose by 1.24% to N277.4 billion while gross profit fell 5.3 percent to N112.32 billion in the period under review as against N118.7 billion the previous year.

A massive N85.26 billion net loss on foreign exchange transactions led to loss after tax of N47.59 billion.

Consumer goods firms are struggling with volatility in the price of the global commodity market which balloons raw material cost, logistics problems, deteriorating disposable income, and foreign exchange illiquidity.

Nigerian Breweries stock has returned -2.44% year to date, underperforming the wider NGX all share index which is up 27.7% so far in 2023.

"The 2nd Quarter of 2023 was significantly impacted by various factors including the effect of fuel subsidy removal on consumers, naira devaluation and its effect on input cost, and mostly the revaluation of foreign exchange obligations. Together with the cash crunch which materially impacted the 1st quarter, the Company’s net loss was escalated," Nigerian Breweries said in a statement.

https://moneycentral.com.ng/markets/article/nigerian-breweries-q2-loss-widens-to-n47-5bn-on-fx-transactions/

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…with page out of Carl Icahn’s playbook

…Transcorp investors seek meeting with Board over performance

BALA AUGIE

Billionaire investor Femi Otedola is shaping up to be the Carl Icahn of corporate Nigeria as he continues to take large stakes in companies that are struggling and, subsequently, turning them into cash cows that deliver value to shareholders.

In a Nigerian corporate culture where activist shareholders are non-existent, Otedola is blazing the trail and sounding a rousing wake-up call that business as usual is over for the companies he has taken significant stakes in.

Carl Icahn is an American financier and one of the richest men in the world who is the founder and controlling shareholder of Icahn Enterprises, a public company and diversified conglomerate holding company based in Sunny Isles Beach, Florida, USA.

Icahn is arguably the most famous activist investor of his time, if not all time. The billionaire investor has had his hands in a number of corporate moves over the years, with a number of notable successes.

He buys stakes in firms that he believes will appreciate via changes to corporate policy and he then pressures management to make changes that he believes will benefit shareholders.

What Are Activist Investors?

Activist investors are individuals or groups that purchase large amounts of shares in a public company in order to make a major impact on and changes to the company.

Some activist investors will also try to get a seat on the company’s board in order to achieve that goal. Typically, these investors target companies they believe to be mismanaged or ones that could be run more profitably. The goal is to fix the underlying issue to increase the company’s value and profit from the rise in its share price.

Otedola’s recent corporate interventions

Femi Otedola is a successful and astute investor and has been shaking up corporate Nigeria over a decade as he profits from takeovers and accumulation of shares to the benefit of shareholders.

Such investment strategies which often create wealth and employment are needed to bolster economic growth in a country where over 50 percent of the population of 200 million live on less than $1.98 a day.

As a leading shareholder activist, his efforts have unlocked billions of Naira of shareholder and bondholder value and have improved the competitiveness of Nigerian companies.

One of his most notable ventures was the takeover of struggling petroleum marketer, African Petroleum, (whose name was later changed to Forte Oil), from the government-owned oil company, the Nigerian National Petroleum Corporation (NNPC).

Of course, Forte Oil, whose name was changed to Ardova Plc later it sold its majority stake to Prudent Energy in 2018 is one of the largest downstream oil and gas firms in Nigeria with outlets across the country.

As at the time of sale, Ardova Plc had a market capitalisation of N22.20 billion as at April 18, 2022.

Without ingratiating magniloquence, the billionaire business is deep-witted, sagacious, and a visionary leader who understands that honesty and competence inspire trust. And that investors are allured by dividend paying stocks.

The Otedola lift

The Otedola lift occurs because Mr. Otedola is creating value for the shareholders of the companies in which he takes majority or sizable stake.

There was an upward movement in the share price of First Bank Holding Plc which Otedola bought into to become a majority stakeholder.

On October 23, 2021, the activist investor and his nominee, Calvados Global Services Limited acquired a total of 1,818, 551,625 units of shares from the Company’s issued share capital of 35,895,292791.

There has been significant improvement in the profitability and balance sheet of a lender since the last quarter of 2022. Hitherto, it had been reeling from deteriorating asset qualities and poor earnings.

The Bank’s return on average equity (ROAE), a measure of profitability and efficiency, increased to 13.70 percent as of March 2022 from 7.20 percent as of March 2021.

It is worthy to note that the lender is efficient at utilizing its operating resources to generate income as cost to income ratio reduced to 65 percent in the period under review from 73.50 percent as of March 2021.

Enhanced balance sheet strength supported by sustained asset quality improvements means Nonperforming Loans (NPLs) improved to 4.70 percent in the third quarter of 2022 from 6.10 as at Q3 2021. Interestingly, the 4.70 percent NPLs is below the regulatory requirement of 5 percent.

It is interesting to note that Femi Otedola made a foray into the power sector, through Amperion Power Distribution Company Limited, a subsidiary of Forte Oil Plc, which acquired the Geregu power plant in 2013 and has invested $94 million in the power plant.

Last year, Geregu Power, the leading power generation company (Genco) in Nigeria, became the first Genco to be listed on the NGX Main Board, a listing segment for well-established companies with demonstrable records of accomplishments.

As part of its growth plans, Geregu Power Plc is bidding to acquire one of the National Integrated Power Plants (NIPPs) being put up for sale by the Federal Government through the Bureau of Public Enterprises (BPE).

“With the acquisition, we will run a combined cycle operation to ramp up capacity to 1,000 MW in 2 – 3 years,” Akinfemiwa, CEO, Geregu Power Plc, said.

Geregu plans to also take ownership of its feedstock (gas), so as to have a vertically integrated power production business, according to Akinfemiwa.

Otedola’s magic fingers needed to invigorate beleaguered Transcorp

Femi Otedola’s magic fingers which turns whatever he touches to gold are needed to transform beleaguered Transnational Corporation Plc, one of Nigeria’s leading conglomerates, into a market’s bellwether stock that magnifies the earnings of owners.

Since Otedola reportedly acquired 2.24 billion shares, equivalent to a 5.52% stake in Transcorp Plc with investment in hospitality, power, and oil and gas sectors, the market has been abuzz with excitement.

Over the weekend news broke that the chair of Lagos-listed Geregu Power Plc, Femi Otedola, has upped his interest in the conglomerate Transnational Corporation Plc (Transcorp) to 6.3 per cent, two separate notifications seen by MoneyCentral show.

Sources tell MoneyCentral that Otedola’s total stake in Transcorp today is over 7% and he effectively is the largest shareholder of the entity.

However, the company is underperforming as financial performance disappoints, and if something urgent is not done, deteriorating earnings risk eroding shareholders’ value or leading to depressed stock price.

Such sharp earnings decline underpins the argument that chief executive officers (CEO) are overpaid and that their salaries are not compatible with shareholders’ return.

Transcorp earnings deteriorate in Q1

For the first three months through March 2023, Transcorp’s net income fell by 63.06 percent to N1.83 billion from a profit of N5.03 billion as at March 2021; and that was the first profit drop since 2015.

The drop in profit is largely due to a N2.45 billion foreign exchange loss on financing activities or borrowing and slow growth in revenue as revenue.

For instance, revenue from energy sent out-which make up 48.94 percent of total revenue- increased by a meagre 4.37 percent to N15.97 billion as at March 2022......

https://moneycentral.com.ng/exclusive/article/otedola-sends-wake-up-call-to-sleepy-nigeria-boardrooms/