Between 2013 and 2017, 6 companies recorded positive growth in their earnings on the consumer goods index. Amongst these companies is Dangote sugar refinery which recorded an average growth rate of 30 percent, making the firm the best performing company by earnings growth on the consumer goods index during the period of analysis. The consumer goods index comprises the most capitalized and liquid companies in food, beverage and tobacco on the Nigerian Stock Exchange. The index is designed to provide an investable benchmark to capture the performance of the consumer goods sectors. There are currently 15 stocks on the consumer goods index. Despite the economic headwinds that have stifled economic growth, caused the first recession in 25 years and hurt consumer spending, a few consumer goods companies still managed to deliver stellar performances. Topping the earnings growth chart between 2013 and 2017 were Dangote Sugar (30%), NASCON (15%), Unilever (10%), Nestle (9%), Honeywell Flour (9%), and Flour Mill (3%). Companies who saw their bottom-line grow the slowest during the period are include International Breweries, Guinness Nigeria plc, Cadbury Nigeria Plc, Northern Nigeria flour mills, Vitafoam Nigeria plc and Champion Breweries plc. Dangote sugar saw a spike in its profits in 2016 as profit grew from N11.14 billion in 2015 to N14.39 billion in 2016 representing a 29 percent growth in profit. Profit after tax almost tripled in 2017 y/y to stand at N39.7 billion up by 175 percent. Analysis shows that Dangote sugar was rewarded by investors outperforming its peers to be the best performing stock within the period. The firm’s stock price grew by about 115 percent between 2013 and 2017. Within these periods, growth in earnings lagged growth in share price. It could mean the market is sees Dangote stock being undervalued thereby repriced at a higher price than its earlier price. Surprisingly, International Breweries, despite being amongst the biggest under performers based on earnings growth between 2013 and 2017, came behind Dangote sugar to be one of the best stock performers in the consumer goods index. Despite revenue grew by 40 percent in 2017, PBT fell significantly by 21 percent in the same year. This led to a decline in profit after tax (PAT) from N2.6 billion in 2016 to N1.03 billion in 2017. Analysis reveals that operating expenses as well as cost incurred by the firm jumped ominously within the period. BUSINESSDAY PG. 14, JULY 20, 2018.
by DSRNews DSRNews