PepsiCo snack sales continue to rise; while beverages fall in Q2 2020

  • PepsiCo’s net sales fell by 3.1% during the second quarter.

  • Excluding items, the company earned $1.32 per share.

  • Pepsi reported falling organic sales for its North American beverage unit, but Frito-Lay and Quaker Oats saw organic revenue growth.

PepsiCo reported that its quarterly revenue fell as fewer consumers bought its drinks at restaurants or convenience stores as a consequence of the coronavirus pandemic.

But its food business fared better, with products like Cheetos and oatmeal seeing strong growth.

In the three months, PepsiCo posted net revenues of $15.95 billion, beating analyst forecasts in what has been described as ‘stronger-than-expected results’.

PepsiCo’s latest figures follow along with the same pattern as its first-quarter results, in which it had noted a decrease in immediate consumption and away-from-home channels due to Covid-19 which was negatively impacting its beverages business.

Meanwhile, consumer demand for its snack business has continued to rise. Earlier this month, Frito-Lay announced its decision to invest $200 million to expand its snack manufacturing operations in Perry, Georgia.

PepsiCo saw a net revenue rise of 23% in its Quaker Foods North America unit to $664 million and a 55% increase in operating profit.

Last month, PepsiCo’s Quaker Oats subsidiary announced that it will replace and retire its Aunt Jemima range of breakfast products, acknowledging the imagery behind the brand was “based on a racial stereotype”.

In its Europe and Latin America segments, net revenue declined by 9% and 17%, respectively.

PepsiCo Chairman and CEO, Ramon Laguarta said:

“I’m very pleased with the way our organization has protected our associates and served the needs of our customers, consumers and communities throughout these incredibly difficult times,”.

“Despite being faced with significant challenges and complexities as a result of the COVID-19 pandemic, our businesses performed relatively well during the quarter, with a notable level of resiliency in our global snacks and foods business.”

“Encouragingly, as restrictions and closures eased and population mobility improved as the quarter progressed, we also saw an improvement in our business performance and channel mix dynamics.”

“However, the environment has remained volatile and much uncertainty remains about the duration and long-term implications of the pandemic.”

“As a result, we are not providing a financial outlook for the fiscal year 2020 at this time. However, we continue to believe we have ample liquidity and flexibility to meet the needs of our business and return cash to shareholders.”

“We remain focused on winning in the marketplace with our strong portfolio of brands in attractive categories, agile supply chain and flexible go-to-market systems, while also building on our competitive advantages, to emerge an even stronger company in the future.”

Diageo to unveil Johnnie Walker whisky in paper bottles in 2021

Diageo has created the world’s first-ever 100% plastic-free paper-based spirits bottle, made entirely from sustainably sourced wood. The bottle will debut with Johnnie Walker, the world’s number one Scotch Whisky, in early 2021.

It has been created through a new partnership with Pilot Lite, a venture management company, to launch Pulpex Limited, a new world-leading sustainable packaging technology company.

To ensure that the technology can be used in every area of life, Pulpex Limited has established a partner consortium of world-leading FMCG companies in non-competing categories including Unilever, and PepsiCo, with further partners expected to be announced later in the year.

The consortium partners are each expecting to launch their own branded paper bottles, based on Pulpex Limited’s design and technology, in 2021.

“We’re proud to have created this world first. We are constantly striving to push the boundaries within sustainable packaging and this bottle has the potential to be truly ground-breaking. It feels fitting that we should launch it with Johnnie Walker, a brand that has often led the way in innovation throughout its 200 years existence.”

Ewan AndrewChief Sustainability Officer, Diageo PLC

Pulpex Limited has developed a ‘first-of-its-kind’ scalable paper-based bottle designed and developed to be 100% plastic-free and expected to be fully recyclable. The bottle is made from sustainably sourced pulp to meet food-safe standards and will be fully recyclable in standard waste streams.

The technology will allow brands to rethink their packaging designs, or move existing designs into paper, whilst not compromising on the existing quality of the product.

Pulpex Limited’s technology allows it to produce a variety of plastic-free, single mould bottles that can be used across a range of consumer goods.

The packaging has been designed to contain a variety of liquid products and will form part of Diageo’s commitment towards Goal 12 of the United Nations Sustainable Development Goals: ‘Responsible Consumption and Production’.

Reasons Behind the Success of Three of Gaming’s Biggest Brands

Photo by João Ferrão

The gaming industry is huge. In 2019, gamers spent $152.1 billion on buying titles and paying for in-game items. This figure was almost 10% higher than in 2018, showing that the industry doesn’t look like it’s going to be slowing down any time soon. It’s a trend that African developers are also benefiting from.

While there have been few losers in the video games market in recent years, there have been some huge winners that have raked in huge sums from their gaming products. Here’s a look at some of these brands and why they’ve been so successful.

Rockstar Games

Few game developers can publish titles that remain in the top 10 best selling list seven years after they first hit shelves. Rockstar Games can though, and it’s exactly what they managed to achieve with Grand Theft Auto V.

Rockstar, which started out as DMA Design in the 1980s, saw its first success by publishing the popular game Lemmings. Throughout these early years, the company built up a reputation for taking risks in its development, instead of chasing easy money from proven and repetitive titles. This risk-taking led to the development of Grand Theft Auto.

GTA was a hit on the PlayStation, but it wouldn’t become the huge success it is today until Grand Theft Auto III for PlayStation 2, which was released in October 2001. After a string of other titles, the GTA series has become the most successful in the world.

This comes from a combination of different factors. The first is that the open-world structure lets players enjoy the game in the way that they want, rather than being forced down a particular path. This was particularly novel at the time of earlier GTA releases. The games also execute each element (the story, the driving, the shooting, the mini-games, and the freedom) exceptionally.

Rockstar has since carried these elements over to games like Red Dead Redemption, making them fan favourites too.

PokerStars

PokerStars is one of the biggest online poker brands in the world. Having been founded in 2001, the company has refined its product offering over the last two decades to include a wide selection of real money games and online tournaments. It also sponsors some of the world’s most prestigious live poker competitions, such as the European Poker Tour, which holds events in cities like Barcelona, Prague and Monte Carlo.

In addition to its real money games, PokerStars also offers free-to-play versions where players can compete in online tournaments like the Sunday Billion. The company also has a virtual reality poker game, which is available to download through Steam. In it, players can immerse themselves in a 360-degree environment that creates the most realistic digital poker experience available.

PokerStars’ success lies in its commitment to innovation and willingness to invest heavily in its marketing.

Photo by SCREEN POST

Tencent

Tencent is a comparatively newer name in the industry compared to some others on this list. The company was founded in 1998 and has since grown to become a multinational conglomerate, with divisions that deal in social media, music, e-commerce, and payment services.

The company’s gaming arm, Tencent Games was founded in 2003, with a focus on mobile and browser-based games that have a wider appeal. It initially placed most of its focus on the domestic Chinese market but has since expanded internationally.

Recent titles include Call of Duty: Mobile, Fortnite, PlayerUnknown’s Battlegrounds and Ring of Elysium. With the exception of the Ring of Elysium, Tencent only owns a partial stake in these games, which has been how it’s been able to associate its name with so many of the biggest titles of recent years.

Tencent makes the majority of its money from in-game purchases and has helped to drive the free-to-play model further. This has driven the company’s net profits to more than $4 billion per quarter.

There doesn’t seem to be any sign of it slowing down either. Tencent Games has been developing its own games console and operates its own platform, WeGame, a rival to established services like Steam. With deep pockets and a desire to innovate, there appear to be no limits to what Tencent can achieve.

Dangote Sugar acquires Savannah Sugar for Market Expansion

In a bid to enhance production capacity and further increase its market share, shareholders of Dangote Sugar Refinery Plc (DSR) have given the nod for the formal takeover of Savannah Sugar Company Limited.

Shareholders of DSR during their Extraordinary General Meeting, which was preceded by the 2019 Annual General Meeting, voted in favour of the merger of the two companies as sub-Saharan Africa’s largest sugar refining firm embarked on the next stage of its backward integration plan to revolutionise the sugar sub-sector of the nation’s economy.

The Chairman of the company, Alhaji Aliko Dangote, said the DSR, a top tier player in the industry with an installed capacity to produce 1.44 million metric tones per annum, will be leveraging on the Savannah Sugar’s sugarcane production capacity to enhance its production capacity.

According to Dangote, Savannah Sugar has 32,000 hectares of land available for cultivation of sugar cane as well as milling capacity of 50,000 tonnes of sugar per annum and that upon the merger, further investments would be made to increase SSCL land under cultivation.

Dangote explained that the DSR board considered the merger as fair and reasonable and believed that it would provide strategic opportunities and benefits for the company, employees and other stakeholders as the new company would be operating from the position of increased access to capital and then higher profitability.

He listed some of the benefits of the merger as being to consolidate the assets, intellectual property rights, operations and business dealings of the SSCL into the DSR; eliminate cost inefficiencies arising from duplication of resources and processes and improve the efficiency through more focused management of resources; and position it as the biggest integrated sugar producer in Nigeria.

The Chairman of the Company explained that necessary approvals have been given by all concerned regulatory authorities and the merger would positively alter the sugar sectorial landscape as the Federal Government’s backward integration policy would be better implemented by the company.

Nigeria’s Domestic Debt Service increased by 295% in Q1 2020 – NBS

Domestic debt service increased by 295% from Q4 2019 to ₦609 billion in Q1 2020. FGN bonds made up 80% of the domestic debt service. Total debt increased by 4% from last quarter to ₦27.4 trillion, made up of 65% domestic debt and 35% external debt.

According to the Nigerian Domestic and Foreign Debt Q1 2020 report released by the National Bureau of Statistics (NBS), Nigeria’s total public debt showed that N9.99trn or 34.89% of the debt was external while N18.64trn or 65.11% of the debt was domestic.

Of the domestic debt of N18.64 trillion, the federal government’s share alone is N14.53 trillion compared to Q4 2019 when the total domestic debt was N18.37 trillion with the federal government accounting for N14.27 trillion.

Similarly, States and FCT domestic debt was put at N4.11trillion with Lagos state accounting for 10.8% of the total domestic debt stock while Yobe State has the least debt stock in this category with a contribution of 0.7%.

Federal government’s domestic debt service for Q1 also increased to N609.13 billion compared to N254.04 billion in Q4 of 2019.

Abia State accounted for N69.63 billion of the domestic debt stock of states, Adawawa N101.58 billion, Akwa Ibom N240.03 billion, Anambra N33.91 billion, Bauchi N100.40 billion, Bayelsa N154.95 billion, Benue N116.19 billion, Borno N83.38 billion and Cross River N165.91 billion within the review period.

Others include Delta N230.75 billion, Ebonyi N42.41 billion, Edo N84.76 billion, Ekiti N77.89 billion, Enugu N62.98 billion, Gombe N82.50 billion, Imo N163.99 billion, Jigawa N36.02 billion, Kaduna N78.69 billion, Kano N107.75 billion, Katsina N66.16 billion, Kebbi N69.26 billion and Kogi N128.91 billion.

Others are Kwara N62.89 billion, Nasarawa N60.99 billion, Niger N59.83 billion, Ogun N143.53, Ondo N65.29 billion, Osun N137.30 billion, Oyo N100.59 billion, Plateau N130.72 billion, Rivers N266.93 billion, Sokoto N47.74 billion, Taraba N81.26 billion, and Zamfara N70.84 billion as well as the FCT with N106.80 billion.

PZ Cussons delists from GSE to improve business operations

The Ghana Stock Exchange (GSE) has approved the delisting of a major consumer goods company, PZ Cussons Ghana from the stock market, following the review of offer documents to initiate the process.

In October 2019, PZ Cussons announced its intention to delist from the stock market following the unanimous approval of a resolution seeking to undertake the Offer and to De-List the Company from the GSE.

According to PZ Cussons Ghana, the proposed de-Listing is in line with the company’s plans to achieve operational efficiency, by providing management of the company more time and resources to focus on running and expanding the business, its distribution network and reach, thereby ensuring consumer satisfaction.

In view of the approval, Ghana Web has reported that PZ Cussons has announced its tender offer to existing Qualifying Shareholders of the company to purchase fully the entire shareholding of each Qualifying Shareholder.

The Offer is priced at GHc 0.45 per PZ Cussons Share representing a 15.4 per cent premium above the market price of GHS 0.39, which is the higher of the average 12-week market price and the market price on the annual general meeting date.

The process began with the opening of the offer on July 6, 2020, and will close on August 17, 2020. The settlement would be made on September 4, 2020.

Currently, PZ Cussons has a total of 168 million shares issued on the bourse, with a total market capitalization of GHc 63.84 million (US$11m).

IC Securities Ghana Limited is acting as sole financial adviser and sole sponsoring broker to PZ Cussons in respect of this Offer.

At the end of the process, this will raise the total number of companies delisted from the bourse to six over the past three years – some voluntary, some enforced. This will reduce the number of companies listed on the bourse to 31.

In neighbouring Nigeria, the subsidiary of Manchester-based PZ Cussons Holdings has donated soaps to the Lagos State Ministry of Health in bid to curb the spread of the COVID-19 by promoting hygiene through regular washing of hands with soap and clean water.

The PZ Cussons Foundation had previously donated soaps to over 40,000 people in six major cities across Nigeria in collaboration with the Foundation for Refugee Economic Empowerment (FREE), a UK and Nigerian charity organization.

The power of women in the 21st Century: The Zinox Group example By Dr. Abiona Iwajowa

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“There’s something so special about a woman who dominates in a man’s world. It takes a certain grace, strength, intelligence, fearlessness, and the nerve to never take no for an answer.’’ – Rihanna

“A 21st Century woman is a privilege and special blessing to a family and society and anointed to lead corporates and countries from the second quarter of this century. Leadership shall demand global knowledge, style, absolute trust, creative energy and faith in God and all these are domiciled as a right in today’s civilized woman.” – LeoStan (2019)

For long, the world has paid lip service to the place of women in the global scheme of things. The situation, although more critically felt in developing economies, Nigeria inclusive, is one that has remained a problem globally.

Indeed, gender equality is a globally-acknowledged human right. Nevertheless, the world today still faces a disturbing and abject reluctance to leverage on the potential of this very important gender in shaping our existential narratives. Put in another way, despite the growing evidence of the sterling qualities and achievements that women have proved capable of delivering, there are still huge gaps in access to opportunities and decision-making power for women.

Globally, women have fewer opportunities for economic participation than men, less access to basic and higher education, greater health and safety risks, and less political representation. The situation is the same in the corporate space where men have been known to dominate leadership positions, even when there are more capable or at best, equally qualified or suited female counterparts.

Today, women leaders are still pitiable minority in various sectors. Men continue to outstrip women in leadership roles across every sector in the world. This includes government, corporate, non-profit, education, medicine, military and religion. Research also reveals that globally, at Fortune 500 companies, women hold only 19 percent of board seats and 15 percent of executive management positions. In addition, the number of female CEOs at these companies is a paltry four percent. Four percent of 500 companies equals 20 female CEOs, with male CEOs running the remaining 480 companies.

A report published in March 2020 by data mining company PayScale also shows a global disparity in how men and women are paid, even when all compensable factors are controlled, meaning that women are still being paid less than men due to no attributable reason other than gender. In 2020, women make only $0.81 for every dollar a man makes.

As demonstrated above, this is not only a Nigerian problem. It is a global phenomenon.

The foregoing is in contrast to the evidence-based capacity of women to create a positive disruption when placed in leadership positions.

It is an open secret that guaranteeing the rights of women and giving them opportunities to reach their full potential is critical, not only for attaining gender equality but also for meeting a wide range of international development goals. Research shows that empowered women and girls contribute to the health and productivity of their families, communities and countries, creating a ripple effect that benefits everyone.

As Michelle Obama, former First Lady of the United States of America one famously declared: “There is no limit to what we, as women, can accomplish.”

Numerous examples abound in government circles, with the likes of Angela Merkel, a woman who leads the powerful nation of Germany. In Chile, Michelle Bachelet also distinguished herself as President of the South American country from 2006 to 2010 and again from 2014 to 2018, the first woman to occupy the position. This is just to mention a few.

Here in Africa, women have also shown they have what it takes to lead from the front, with Liberia’s Ellen Johnson Sirleaf covering herself in glory after winning the presidential election in 2006, the first in Africa. She was also re-elected in 2011.

Even in the corporate world, where men have dominated, instances abound of women who have distinguished themselves when appointed to leadership positions.

However, there is still a grudging refusal to empower women with leadership responsibilities, not only in Africa., but the world over. Here in Nigeria, there is oftentimes a shocking mindset when women assume top roles in an organization. In most cases, there is a belief that she was unfairly favoured or, if she is an attractive woman, then she is deemed to have compromised or slept her way to the top.

This is why the example of Leo Stan Ekeh, Chairman of the Zinox Group is worth mentioning.

Although I have not had the privileged of a one-on-one encounter with the man, I recall that as far back as 2014, he had declared that women will lead the world, not as second class citizens, but in the management of global resources mainly in the corporate marketplace, by the second quarter of the 21st Century which starts by 2026. Ekeh, who was speaking at a Women in ICT event at Sheraton Hotel, Ikeja, had cited the increasingly pivotal role women in the corporate sector are playing in the global arena.

Here is what he had to say: “Women are naturally more structured, trustworthy, less greedy, live longer and more prayerful than men. These innate qualities have strategically endowed women with the basic ingredients for leadership. As entrepreneurs, all you need to do is combine these innate qualities with absolute commitment, capacity for innovation, credibility and sound digital knowledge and very soon, the male folk will be struggling to keep pace with the women in the industry.’’

Fast forward to 2019, I was privileged to attend the Disrupt Africa conference organised by Access Bank in May 2019 where Mr Ekeh was one of the guest speakers at the event.

This time, he had also preached the gospel of women empowerment to the packed audience at the Landmark Centre, Oniru, Victoria Island. According to him, gone are the days when parents would rather prefer to have male kids, as was in the case in the olden days. Ekeh had stated that women are heavily knowledgeable, highly domesticated, humane, humble and less greedy, even as he noted that current statistics indicate that women have proven to be more knowledgeable and intelligent compared with men in the same age bracket and intelligence quotient (IQ). Further, he cited their concentration power and integrity in managing resources as far higher than those of their male counterparts.

Equally important, he had told the listening audience that the foregoing had nothing to do with Africa, noting that it was a global phenomenon.

I was one of the many who had given him a standing ovation at the end of his moving speech. After the conference, I had engaged a few other participants on the thoughts expressed at the event especially the thought-provoking ones espoused by Mr Ekeh. I was initially of the impression that he was probably playing to the gallery at the conference, as many are wont to do at such public speaking engagements.

This had made me embark on some sort of mini-research or investigation into the Zinox Group. However, my investigations threw up a startling revelation and actually gave me some hope in the future of the battle for women empowerment in Nigeria and beyond.

Indeed, the Zinox Group, led by Ekeh, remains a shining light and a good example of a conglomerate that has not only justified the power of women as leaders but also given them an equal playing ground to thrive.

At Technology Distributions Ltd. (TD Africa) which incidentally is arguably the biggest company in the Zinox Group in revenue terms, women occupy the first four management executive positions. The company is led by the CEO, Mrs Chioma Ekeh, wife of Ekeh, a first-rate mathematician and certified Chartered Accountant who has previously worked in the United Kingdom. Next to her is another woman, the Coordinating Managing Director, Mrs Chioma Chimere. Following closely is yet another woman, Mrs Shade Oyebode, who is the Managing Director (Operations) and then, Mrs Andrea Ijogun who is the Managing Director (Sales). Although I did not succeed in obtaining a clear state of the company’s impressive financial figures, it is worth mentioning here that Technology Distributions Ltd. is credited with pioneering ICT distribution in West Africa and till today, it represents the biggest, globally recognised names in the sector such as Microsoft, IBM, Dell, HP, Samsung, Cisco, Lenovo, to mention a few.

If the example of Technology Distributions is deemed a fluke or a chance occurrence, then let us turn our attentions to Zinox Technologies Ltd., the most popular company in the Zinox Group. In 2006 and 2010, the company had rescued Nigeria from a national embarrassment by overseeing the rollout of the computer hardware, components and software solutions used by INEC for the successful conduct of the general elections, rising to the occasion to deliver after foreign contractors failed. It repeated the feat in 2014 when it designed the Direct Data Capture (DDC) machines, Card Readers and worked with INEC in capturing and delivering a credible database of voters – a factor which contributed immensely in reducing post-election litigations.

Zinox Technologies Ltd. is also led by a female Managing Director, Mrs Kelechi Eze-Okonta –  with an M, Sc. in International Business Management from University of Liverpool, United Kingdom –  a position she has held, along with all the perks of that office, for the past three years.

Do we still consider that a fluke?

If so, what about Task Systems Ltd., Leo Stan Ekeh’s first company? Incorporated over 30 years ago in 1987, Task Systems Ltd. was the company through which Mr Ekeh transformed the Nigerian media and publishing landscape, transitioning it from its prevailing analogue state of metal cast style publishing and ushering them into the world of Desktop Publishing and Computer Graphics many years ago.  In fact, my late twin brother, who was a top journalist, was one of the witnesses of this revolution which transformed the likes of Punch, Guardian, Sketch, Daily Times, Vanguard, Daily Independent and many others. Back then, he had claimed that Mr Ekeh was an American whiz-kid! It was until recently that I discovered that he trained in India and the United Kingdom.

For the past five years, Task Systems Ltd. had a woman, Ms Olufunke Oduntan, as Managing Director. It was only earlier this year that she was replaced by a man, Stanley Okpalaeke with an MBA from LBS as MD after her retirement.

The Group Head, Human Resources, Mrs Chioma Nwoke, is also female.

Across the Zinox Group, women have not only held top executive management positions; they have also been encouraged to aspire to the very echelon of the corporate ladder. In this remarkable Nigerian example, there are no glass ceilings for the women-folk. At this juncture, it is worth stating that some of these women have worked in the Zinox Group for the past 20 years, growing through the ranks and displaying a high level of integrity, performance and credibility – qualities that have made them undisputable choices for the rarefied positions they occupy.

Indeed, each of these women has merited their appointments.

This is clear when you look at their respective profiles. These are corporate giants who know their onions and who can defend their appointments or distinguish themselves in similar appointments in the global marketplace. These are women who are ethical and spiritually filled and imbued with the right ingredients to drive business to profitability. Further, their occupancy of those lofty positions is tested on an annual basis, with their unerringly brilliant leadership seeing to the continuous profitability of the Zinox Group.

More remarkable is the fact that the Zinox Group has remained at the forefront of sustaining Nigeria’s march to technological emancipation. The numerous feats recorded by the various companies in the Zinox Group have not only given Nigeria a voice in the technology sphere but have also gone a long way and still continues to usher millions of Nigerians into the contemporary world mediated by advancements in technology.

But there has hardly been any significant recognition for this Nigerian miracle.

It appears the Nigerian government is more comfortable with recognizing politicians or noise-making institutions and persons who hardly contribute anything of note to the nation’s development. If not, how do we justify the fact that such a gender-sensitive, high-performing entity that has been in business for over 30 years in difficult terrain such as Nigeria without any major scandal, providing direct and indirect employment opportunities for millions of Nigerians has not received any form of special honour by the Nigerian government?

I put it down to the fact that the Zinox Group is not a noise-making entity, as exemplified by the character of the organization and the fact that its leadership is dominated by women, who are naturally conservative. Perhaps, if the company was into beating the drums of its many achievements they would be identified. Very unfortunate!

Having a man such as Leo Stan Ekeh as a Nigerian is a blessing to this country. These are the kind of leaders that Nigeria needs – people that see beyond today. He has shown a remarkable vision in many of his dealings and specifically, with his clarion calls for women empowerment which he has not only preached but implemented across his companies while the country struggles with civilization.

Little wonder, Mr Ekeh has been at the forefront of driving the charge to computerize Nigeria for the past 30 years, as he has always declared that no nation is truly independent without achieving technological independence.

Despite the non-recognition by the Nigerian government for its many contributions to national development, the Zinox Group has been mightily blessed. In my research, I have followed the growth of this exciting technology group and, despite the difficulties in the operating environment, the Zinox Group has continued to give hope to many Nigerians.  No wonder Alhaji Lateef Jakande- the former Governor of Lagos state said at the launch of Task Systems’ Allen Avenue, Ikeja office in 1992, that if the country could have five Leo Stan Ekehs, Nigeria would emerge as a quality representative of Africa in the global community.

Today, a lot of our young ones are out of school without any clarity as to how long this predicament will last. Yet, the government cannot partner with a proudly Nigerian brand such as this to empower these little kids, all of whom will pay taxes in future, with simple gadgets and devices to aid their learning. On the other hand, the government is investing billions in a feeding programme riddled with controversy for out-of-school children.

What a shame!

Dr. Abiona Iwajowa is a policy expert who writes from Kano

Slow Rise To Economic Redemption – Gradual Recovery But Weaknesses Persist

Global Markets

The United States economy reported an improvement in unemployment levels in June 2020, despite the rising new cases of people infected with the coronavirus. The United States currently has over 2.9 million total cases, with a total death toll of 130,332. Nonetheless, the United States Bureau of Labor Statistics reported a 4.8 million rise in total nonfarm payroll employment, thus lowering the unemployment rate to 11.1% in June 2020 from 13.3% in May 2020. According to the Bureau, the gains recorded in the unemployment numbers reflected the partial resumption of economic activities that had been curtailed due to the coronavirus pandemic in April 2020 and March 2020.

Inflation (data for May 2020, released in June 2020) declined for the third straight month due to the weak demand for goods and services, resulting from the loss of jobs and income by households, induced by the coronavirus pandemic. Notably, the core personal consumption expenditures (PCE) increased by 1.0% year-on-year (YoY) in May 2020. The PCE price index is tracked by the Federal Reserve (Fed) as the preferred inflation measure to compare with the Fed’s 2.0% target.

The rally in the United States stock market (measured by the S&P 500) extended in June 2020, albeit at a slower rate. The S&P 500 rose by 1.84% in June 2020 from 4.53% in May 2020 and 12.68% in April 2020. The slowdown in the rally that began in April 2020 is attributed to fears of a second wave of the coronavirus pandemic which is seen to hamper the gradual reopening of the economy.

Domestic Economy

Using the Purchasing Managers’ Index (PMI) data released by the Central Bank of Nigeria as an indicator, the Nigerian economy contracted in June 2020. The manufacturing PMI in June 2020 stood at 41.1 points, which implies that the economy contracted during the month. The contraction recorded during the period represented a second consecutive monthly decline. The subsectors that recorded a decline include printing & related support activities; textile apparel; leather & footwear; primary metal; plastic & rubber products; non-metallic mineral products; fabricated metal products; food, beverage & tobacco products; chemical & pharmaceutical products and furniture & related products. However, growth was recorded in some subsectors which include electrical equipment; cement; petroleum & coal products; transportation equipment and paper products.

The non-manufacturing PMI stood at 35.7 points in June 2020, which implies that there was a contraction in non-manufacturing activities during the month. Although the contraction in June 2020 was the third consecutive monthly decline recorded, the performance showed a gradual recovery in non-manufacturing activities when compared to May 2020 index. A decline was recorded in all the 17 subsectors surveyed, some of which include agriculture; real estate rental

  • leasing; finance & insurance; transportation & warehousing; accommodation & food services; health care & social assistance; wholesale/retail trade; information & communication; educational services; construction and public administration and others.

We attribute the decline in both the manufacturing and non-manufacturing PMI to the sustained impact of the lockdown directive by the Federal Government. Although we note that a gradual resumption of activities is taking place, the levels are still low relative to normalised levels.

Inflation data (for May 2020, released in June 2020), as reported by the National Bureau of Statistics (NBS) showed that inflation rose to 12.40% YoY in May 2020, relative to 12.34% YoY in April 2020. The rise in inflation levels was driven by increases in the food index and the core index. Based on our assessment, we posit that the increase in food prices was related to the disruption in the supply chain (induced by the coronavirus pandemic), seasonality effect, and high transportation costs. On the other hand, we attribute the rise in the core index to be significantly driven by the exchange rate adjustment by the CBN in March 2020.

In summary, the economy was weak in June 2020, largely resulting from the continued impact of the coronavirus pandemic. The lockdown directive by the FG, to curtail the spread of the virus took its toll on the overall level of economic activities.

Equities Market

The Nigerian stock market, as measured by the NSE All-Share Index declined by 3% on a month-on-month basis, from 25,267.82 points as of the end of May 2020 to 24,479.16 points as of the end of June 2020. After two consecutive months of the rally in April 2020 and May 2020, we believe that the decline in prices in June 2020 was partly driven by profit-taking activities by investors, and partly due to heightened risk expectations in the markets.

SAHCO Plc led the top gainers in June 2020, as the stock returned 62% to investors. On the other hand, GSK Plc led the top losers in June 2020, as the stock price dipped by 32% during the month. We attribute the rally of SAHCO Plc to the release of its FY 2019 audited financial statements, where the company recorded an impressive performance. Specifically, revenue rose by 25% YoY from N6.14bn in FY 2018 to N7.67bn in FY 2019. Furthermore, the company recorded a rebound in the bottom line, as profit before tax improved significantly from a loss of N284.84mn in FY 2018 to a profit of N545.52mn in FY’2019. Profit after tax also improved from a loss of N696.99mn in FY 2018 to a profit of N446.53mn. We believe that the strong FY 2019 performance spurred the increased demand for the stock in June 2020.

Meanwhile, we attribute the 32% price decline in GSK to profit-taking by investors. Although the company reported an 11% YoY growth in the bottom line in its recently released Q1 2020 result, we think that the performance was below investors’ expectations. Notably, the stock recorded a 39% YTD return in May 2020, in which we attribute to the positive sentiments trailing health stocks following the outbreak of the coronavirus pandemic.

Fixed Income Market

The bullish run in the fixed income markets sustained in June 2020, as continued demand persisted amid the excess liquidity in the financial system, coupled with the lack of other viable alternative investments. Average yields in the secondary markets declined across all tenors, save for the 1-year fixed income instruments. In the primary market, there were three treasury bills (NTBs) auctions conducted in June 2020. Yields across the three tenors declined from 2.02%, 2.20%, and 4.02% during the first NTB auction of the month conducted on June 10, 2020, to 1.80%, 2.04%, and 3.75% during the last NTB auction of the month conducted on June 17, 2020, on the 91-day, 182-day, and 364-day, respectively.

The yields at the primary market auctions of the OMO instruments were unchanged in June 2020. Across the three OMO primary auctions conducted during the month, yields remained flat at 4.95%, 7.79%, and 8.99% on the 91-day, 182-day, and 364-day bills, respectively.

Foreign Exchange Market

The foreign exchange market was relatively stable in June 2020, owing to the gradual recovery of crude oil prices in the global markets. However, there were poor levels of supply and activities in the I&E FX window, resulting from weak inflows from portfolio investors. The intervention of the CBN in the I&E window rose by 300% in June 2020. The external reserves declined marginally by 1% from $36.49bn as of the beginning of June 2020 to $36.19bn as of the end of June 2020. Overall, the exchange rate at the I&E window remained stable at N386/$1 in June 2020.

Outlook

As noted in our previous report, we expected to see an improvement in the levels of economic activities in June 2020, owing to the gradual easing of the lockdown. Using the information from the PMI report, although the data revealed that the economy contracted, the contraction was relatively milder than the previous month’s levels. Going forward, we expect to see continued recovery in the economy, albeit very slow and weak.

Our bearish outlook for the equities market remains the same. The two consecutive months rally witnessed in April 2020 and May 2020 snapped in June 2020. In our view, the fundamentals of the economy did not justify the rally in the two months, and we expect to see a normalisation in subsequent months. We note the upcoming release of half-year results by corporates and the possibility of the market to price-in the prospects of interim dividends. Nonetheless, we believe that the impact of half-year results release will be minimal due to an overall weak sentiment in the Nigerian equities market.

We posit a sustained trend of declining yields in the fixed income markets, resulting from the excess liquidity in the financial system. In the foreign exchange market, we expect to see an improvement in FX liquidity owing to a possible sustained rise in crude oil prices. However, we note the significant pressures that pose a threat to the stability in the exchange rate such as the current accounts deficit and potential outflows (amid flight for safety) in the Nigerian financial markets once the FX liquidity situation improves.

 

Nigeria Rugby Football Federation (NRFF) partners Rugby Outreach UK

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NRFF partners Rugby Outreach.

Nigeria Rugby today announced its partnership with Rugby Outreach UK to provide Rugby fitness, strength and conditioning advice to local teams across Nigeria.

Technical Director; Abubakar Yaro says the partnership will help local teams across the country improve their fitness and conditioning required in the game.

The Rugby Outreach Project is a global charity that provides Rugby fitness, strength and conditioning advice. The project operates on every rugby playing continent and assists teams from the grassroots level all the way up to international. This includes Union, League and 7s rugby.

Teams can receive free training programs that focus on areas such as speed, power development, strength and endurance, all focused specifically for rugby.

The programs are tailored to the requirements and needs of the team in question. So regardless of location, available equipment or kit teams can increase their physical development.

The founder of Rugby Outreach is Andy Lockwood who has over 20 years experience in coaching sport and Strength & Conditioning. He spent two seasons with Bath Rugby Academy as a coaching intern and has coached age grade to adult rugby.

You can follow the project at @rugbyoutreach across Facebook, Twitter and Instagram.

i-Maker offers Insights on Using Digital Marketing to Fend off COVID-19

HONG KONG, CHINA – Media OutReach – 13 July 2020 – COVID-19
has changed the way companies around the world conduct their businesses. As an
all-rounded IT company focusing on digital marketing and SEO service i-Maker has been able to observe first hand that the vast
majority of businesses like restaurants, event organisers and more have been
hit hard. So i-Maker offers a packaged IT and digital marketing service. From website design to app development; from search
engine optimization
to applying for
Government fundings like TVP, BUD. But no matter how awful the situation might seem, there’s always a
way around it for businesses who are willing to adapt and pivot their means of
promotion to meet the needs of customers.

 

So how has the approach to marketing
changed?

Traditionally,
businesses have a high affinity for marketing strategies that are much more
product and service-centric to drive more conversions and sales, the goal has
switched to brand awareness. When it comes to allocating marketing budgets to
social media platforms, businesses who are willing to pivot their approach are
turning to the digital landscape. Businesses own their digital channels and
influencers are all great investments for this purpose.

 

Using “Support Marketing” to
position businesses’ brand

Undoubtedly,
during a pandemic much of this huge audience isn’t looking to make huge
purchases or sign up for new plans. Above all, they’re looking for support in a
time of need. But marketing has always been about providing value. Businesses
cannot stand out if they are not directly driving sales.

Navigating the digital marketing presence during a pandemic is about creating
content that will make people’s lives easier in some way or another. Businesses
need to find new ways to connect with people, educate them and even just
entertain them. By humanising the approach and carefully crafting the brand
message to implicitly (or even explicitly) suggest that the brand is there for
people throughout the crisis, businesses will be remembered favourably when
things improve. Fluid, sensitive and transparent content that provides a
tangible benefit to people’s lives is how smart businesses are turning to
digital marketing for everyone’s advantage.

 

Being
able to say that “we were there for you” when times were rough and
then adapting the businesses’ message back to one that helps them remarket
contacts and a new audience is key. It will be instrumental in transitioning
all the brand awareness that the businesses gained during the pandemic towards
new conversions and sales. Besides, aspects of digital marketing like SEO are
inherently long-term strategies. Investing in digital marketing now ensures
that in time, the businesses will thrive and come out on top of the
competition.