As we look back at the Q1 2019 earnings season, one notable trend that jumps at us is the unsynchronized nature of earnings growth – even within each sector. Generally, most Nigerian companies posted lacklustre earnings for the period with the biggest drag to results being uncertainties around the 2019 Presidential elections, which slowed business activities and delayed investments.
Overall, players in the banking sector were the standout, even though election uncertainties predicated flattish q/q loan book. Performance in the Consumer Goods sector was mixed; brewers continued to face competitive pressure, not to also mention the effects of higher excise taxes.
However, FMCG’s such as Nestle Nigeria benefited from volume growth. For the Industrial Goods sector – even though we are yet to see any filing from WAPCO – pressure on pricing impacted Dangote Cement’s earnings. For the oil sector players, performance in the downstream Oil & Gas sector was unimpressive – a reflection of the continued challenging operating environment, while the performance for upstream players was equally underwhelming as declines in oil production predicated relatively lower topline numbers.
In Q2-19, our outlook remains mixed for corporates, though performance may be more positive relative to Q1-19 since election risk is largely done with.
United Capital Plc Research (UCR)