As at the end of Mar-19, the Nigerian Stock Exchange (NSE) officially drew the curtain on FY-18 filings. While the broader economy continued on the path of recovery in 2018, Consumer Goods players were faced with a different economic reality as consumer wallets remained strained.
Save for INTBREW, all the Consumer Goods players under our coverage have submitted their result with largely underwhelming performance relative to the prior year. On a y/y basis, NESTLE and UNILEVER were the only two FMCGs to grow Revenue and Profit (Pre and Post-tax) in 2018 – a performance that was largely supported by the inelastic nature of their core food segments and prior efforts at deleveraging their balance sheet. For the brewers (NB and GUINNESS), rising competition from INTBREW and graduated increase in excise duties by the FG impacted Revenue negatively. Though GUINNESS was able to post a positive bottom-line number thanks to its reduced finance cost pressure, post right issue. For flour millers and sugar refiners, Apapa gridlock continued to affect performance in the subsector negatively.
Thus, while most players would be looking forward to the positive impact of the new N30,000 minimum wage, we believe fixing the current infrastructural deficits will be a bigger win for them.