Daily Market Commentary: Looking Back at the Q4 -17 Earnings Season


As we close the books for Q4-17, we are pleased to note that most Nigerian companies posted strong earnings growth for the period.

Generally, players in the upstream oil and Gas sector have been the standout. The re-opening of the Trans Forcados pipeline proved to be the major game changer for the Exploration and Production sub-sector, as lower cost pressures supported earnings in the downstream segment.

The Agricultural sector showed some strength too, thanks to strong growth in sales and improved margins. Another stand-out was the financial services industry; the insurance players were the
biggest champs in this space, followed by the banking players that benefitted from revaluation gains and solid interest and non-interest income growth. The consumer goods sector – particularly food producing, were the major performers. On the flip side, performance in the industrial goods sector was underwhelming, considering higher-than-expected tax rate and lower volumes during the period.

Looking into 2018, we expect to see further improvements in corporate earnings as consolidated gains in macro fundamentals boost performance. We expect the lower inflation rate to sustain the cost of operation and underpin an expansion in consumer spending. Additionally, we expect the trickle-down effect of an improved oil environment to translate to a rebound in the non-oil sector of the economy.

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