Home Labour FMCG companies profit decline half year 2015

FMCG companies profit decline half year 2015


As economic pressure continues grow in several sectors, companies within the Fast Moving Consumer Goods (FMCG) sector have recorded decline in profits in the first half of the 2015 financial year.
Following the development, some quoted companies including Unilever Nigeria, Nigerian Breweries and other appear to cringe under the weight of the economic pressures experienced within the first half of the year.
A close look at the activities at the nation’s capital market shows that the decline in profit in most companies was occasioned by persistent fall in consumer disposal income while purchase preferences shift to accommodate the rising prices in petrol and a consequent rise in the price of transportation and energy requirement.
However, the positive trend which characterized the Nigerian economy in the last decade took a downward turn with the slump of global oil prices in 2014. This trend continued into the first and second quarter of 2015 and was further escalated within the period by a lull in the retail market in March and April.
While the country’s general economic outlook within this period grossly affected by the financial status of several businesses, many predict that the economy will settle last quarter of this year with the new administration settling down and the country having a clearer direction on government policies.
Meanwhile, Unilever Nigeria Plc recorded a profit decline in its half year 2015 financial statement accounts. While overall results declined, the business improved performance in overheads with a decline of 4per cent from the last quarter, and interest cover declined from a coverage of 4 half year 2014 to 1 half year 2015.
Unilever Nigeria was not the only company worst hit; Nigerian breweries half-year pre-tax profit declined to 8.5percent same period from last year to N30.39 billion, while total revenues grew by 7.2per cent to N151.61 billion. Underlying top line for Nigerian Breweries was down by close to 6per cent. Transnational Corporations half year results showed a 35.6per cent decline in pre-tax profits and a drop in revenue from N21.21 billion to N20.25 billion same periods from last year.
The nation’s financial services sector was also not left out, as many release their results, majority of the banks have cited the slump in oil prices and bad loans as the main reasons for the poor performance half year 2015. Stanbic IBTC Holdings Plc reported a two digit decline in its profits, posting pre-tax profit of N9.537billion in the first half results – 52per cent down from N19.94 billion same period 2014. Post tax profit is 40per cent lower than same period last year, down to N9.695 billion from N16.184 billion.
While some analysts have anticipated that oil prices may slump further with Iran’s entry into the crude oil market, many are hopeful that the economy would indeed pick up once the new administration have fully settled down. The uncertainty around oil revenues and President Buhari’s pledge to support local manufacture are hopefully indicative of a stronger focus on non-oil revenue generation.

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