There are strong indications that despite the underlying oil price shock currently rocking the nation’s economy and the plunge in prices of stocks, Nigerian investors may be heading towards a regime of bumper harvests in some of the leading quoted companies in respect of the 2014 financial year.
This is because the three listed companies which have so far announced their corporate actions for the year to December 31, 2014, recommended dividends. Although some of the dividends recommended are lower than the previous year’s thresholds, analysts and investors said the development would boost confidence in the market.
The three companies include Forte Oil Plc, which approved a N2.50 dividend in addition to one for five bonus for existing shareholders. In 2014, the company paid a dividend of N4 without any bonus share. Another company on the list is Nestle Nigeria Plc which is paying N17.50 as against N24 on May 13, 2014. In all, Nestle will be paying a total dividend of N27.50, having paid an interim dividend of N10.00 per share earlier.
Nigerian Breweries Plc, the third quoted company which also announced its corporate action is paying a dividend of N3.50. It paid N4.50 on May 1, 2014.
Forte Oil is holding its annual general meeting on April 15, while the dividend is to be paid on April 22.
A look at the results of Forte Oil showed that revenue increased by 32.8 per cent to N170.13 billion compared to N128.03 billion recorded in 2013.
Gross profit increased by 51 per cent to N18.46 billion compared to N12.26 billion recorded same period in 2013. Profit before tax recorded a decrease of 7.9 per cent from N6.52 billion to N6.01 billion on the back of high finance charges.
Similarly, an analysis of the Nestle results, which were released on Wednesday, indicated that the company recorded revenue of 143.3 billion, up by 7.7 per cent from N133.1 billion posted in 2013. Cost of sale rose by 7.6 per cent from N76.3 billion to N82.1 billion, while gross profit grew by almost same margin from N56.8 billion to N61.2 billion. Financial charges soared by 147 per cent from N2.1 billion to N5.3 billion. This depressed the profit before tax by 6.7 per cent to N24.4 billion, from N26 billion in 2013, while profit after tax stood at N22.2 billion in 2014 compared to N22.3 billion in 2013.
Market operators said the declaration of the results and dividends came at the right time considering the fact the STOCK MARKET has remained bearish this year despite closing last year negatively. The Nigerian Stock Exchange (NSE) ended 2014 as one of the worst performing exchanges as the market capitalisation of the listed equities fell by N1.749 trillion from N13.226 trillion at the start of the year to N11.477 trillion.
Data compiled by the CNNMoney using benchmark year-to-date (YTD) performances of exchanges as at December 24, 2014, showed that the NSE ranked 72 out of 74 exchanges considered with the NSE All-Share Index (ASI) at 20.67 per cent negative.
A separate report published on December 24 by the United Kingdom (UK) Telegraph ranked Nigeria number three among the worst performing STOCK MARKETS of 2014, with Columbia and Russia occupying the second and first spots, respectively.
However, NSE eventually ended 2014 with a dip of 16 per cent. The performance which was a sharp contrast to that of 2013 which the exchange ended as one of the best performing exchanges in the world with the NSE ASI YTD return of 41 per cent.
After the dismal performance of the market in 2014, it was hoped the market will recover in 2015 to recover as investors were expected to take advantage of low prices of stocks. But recovery did not happen. Rather more decline was recorded due to economic uncertainties and rising political risks as a result of the general elections. The market recorded a year-to-date decline of about 20 per cent as at penultimate week before the bulls set in and reduced the decline to 12 per cent as at Wednesday.
Market analysts are optimistic that more positive 2014 results and dividends would further stabilise the market.