Fast moving consumer goods companies have recorded decline in profits as economic pressures continue to grow.
Unilever Nigeria, Nigerian Breweries and other companies appear to cringe under the weight of the economic pressures experienced in the last six month.
According to a report obtained by our correspondent, the decline in profits was caused by persistent fall in consumers’ disposal income; shift in purchase preferences to accommodate the rising prices in petrol and a consequent rise in the price of transportation and energy requirement. The positive trend which characterised the Nigerian economy in the last decade took a downward turn with the slump of global oil prices in 2014.
The report claimed that the trend continued into the first and second quarter of 2015 and was further escalated in Q2 by a lull in the retail market in March and April.
While the country’s general economic outlook within this period grossly affected the financial status of several businesses, many predicted that the economy would improve in the last quarter of this year as the new administration settles down and the country has a clearer direction on government policies.
Unilever Nigeria Plc records profit declines in its half year 2015 financial statement accounts. While overall results declined, the business improved performance in overheads with a decline of four per cent from the last quarter, and interest cover declined from coverage of four half year 2014 to one half year 2015.
Nigerian Breweries’ half-year pre-tax profit declined to 8.5 per cent same period from last year to N30.39bn, while the total revenues grew by 7.2 per cent to N151.61bn.
Underlying top line for Nigerian Breweries was down by close to six per cent. Transnational Corporations half year results showed a 35.6 per cent decline in pre-tax profits and a drop in revenue from N21.21bn to N20.25bn same period from last year.
The financial sector is 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 N9.537bn in the first half results – 52 per cent down from N19.94bn same period 2014. Post tax profit is 40 per cent lower than same period last year, down to N9.695bn from N16.184bn.
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 will pick up once the new administration have fully settled down.
The uncertainty around oil revenues and President Muhammadu Buhari’s pledge to support local manufacture are hopefully indicative of a stronger focus on non-oil revenue generation.
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