Nigeria’s largest companies listed in the Nigerian stock market have spent a whopping N616.2 billion on investment in the first quarter of the year, analysis by Nairalytics from their financial statements show.
According to the analysis by the research arm of Nairametrics, investment expenditure by the biggest companies on the NGX, from the agricultural, cement manufacturing, FMCG, conglomerate healthcare, insurance, industrial, construction, and the oil and gas sector doubled from N239.14 billion recorded in Q1 2021 to N616.2 billion in the review quarter.
This represents a 158% year-on-year increase and a 237% increase when compared to the N183.1 billion recorded in the corresponding period of 2020. It is worth noting that the figures quoted are net cash outlays, which means that investment earnings in the period have been deducted. The list comprises of 33 of the biggest firms listed in the stock market.
Cash spent on investing activities could include the purchase of property, plant, and equipment (PP&E), purchase of financial assets, which could include bonds, treasury bills, foreign deposits amongst others.
It is important to track companies’ cash flow from investing activities as it shows how a company is allocating its cash for the long term. This also shows how the company is expanding by investing in properties, plants, and equipment. These investments could help the company generate cash flow in the future.
Cement manufacturing giant and most capitalized industrialized firm in the country, Dangote Cement, recorded a net cash flow of N255.67 billion in the first quarter of the year, which is 222% higher than the N79.35 billion recorded in the corresponding period of 2021. The significant increase is due to the N224.1 billion loan given to its parent company, Dangote Industries, while it acquired PPE valued at N37.1 billion compared to N13.5 billion spent in Q1 2021.
Telecommunication leader and the largest telco in Nigeria by customer base, MTN Nigeria, followed with a N246.36 net investment in the review period, increasing by 346.7% compared to N22.15 billion recorded in the same period of the previous year. The growth in its net cash flow from investing activities is due to the increase in the acquisition of other intangible assets, which grew from N61.52 billion recorded Q1 2021 to N141.53 billion in Q1 2022. Also, the acquisition of PP&E increased to N52.16 billion, movement in restricted cash improved from N3.27 billion to N64.45 billion year-on-year.
Third on the list is Seplat Energy. The upstream oil and gas firm spent a net cash of N64.23 billion in Q1 2022, representing 213.9% increase compared to N20.46 billion recorded in the 2021 corresponding period. The company made “deposits for investment” worth N53.41 billion, while it paid N10.07 billion for the acquisition of oil and gas properties.
Others include BUA Cement (N17.33 billion), Mansard Insurance (N8.63 billion), Nigerian Breweries (N7.5 billion), and International Breweries (N7.41 billion).