Business

Investors Pull Out Funds

Investors pull out funds from Guinness, Nigerian Breweries, International Breweries after COVID-19 impact

The bears have taken over the alcoholic companies as investors take out their investment from Guinness, Nigerian Breweries, International Breweries despite exit from COVID-19 mystery for three consecutive weeks.

In a market analysis, it was noticed that the bears are bleeding the three major alcoholic companies dry as investors seem to believe the market will go negative.

The three weeks sell-off followed the release of Nigerian Breweries, International Breweries and Guinness financial statements for the period ended June 30, 2021.

Nigerian Breweries and International Breweries had released theirs at the end of July 30, 2021, posting that they generated N103.58 billion and N42.99 billion in revenue respectively, for Q2 this year

This is significantly above the N68.65 billion recorded by Nigerian Breweries and N25.26 billion generated by International Breweries during the COVID-19 lockdown in Q2 2020 – it represents 51.5 percent and 70.2 percent year-on-year growth respectively.

Guinness, which released its financials on August 26, 2021, had revealed that its revenue for Q2 rose by 54 percent to N160.41 billion, in contrast to the N104.37 billion it generated during Q2 2020.

Note that the nationwide lockdown had affected production volume, sales, and distribution across Nigeria. Business-to-business contracts were also impacted as on-trade and off-trade businesses were also shut down.

Hotels, bars and restaurants, supermarkets, were only opened towards the fourth quarter, hence, the low revenue recorded by Nigerian Breweries, Guinness, and International Breweries.

But the revenue growth across the three major brewers in Q2 2021 failed to attract the bulls or boost investors’ confidence in the companies short-term growth, leading to shareholders entering profit-taking mode.

Ripples Nigeria traced investors’ activities in Guinness, Nigerian Breweries, International Breweries, and discovered that they experienced four weeks bearish run that depreciated their market value by 2.20 percent, 16.5 percent, and 7 percent respectively.

Nigerian Breweries major loser as brewers lose N82.90 billion

Nigerian Breweries, Guinness, and International Breweries lost N82.90 billion to investors mass exit in the last four weeks, making August a bloody month for the alcoholic companies.

Nigerian Breweries

Analysis of Nigerian Breweries, which is the market leader, showed that exiting shareholders of the company lost N71.97 billion during the period under review.

This makes the producer of Star lager beer, Gulder and Maltina, the highest loser, after its market valuation dropped to N383.85 billion as at September 3, 2021, below the N455.82 billion reported on August 9 – its stock is currently valued at N48 per share against the latter’s N57.

Guinness Nigeria

Shareholders of Guinness Nigeria, the second largest market shareholder, lost N1.53 billion to the bears whose rampage cut the brewer’s value to N67.90 billion at of September 3.

The sell-off among Guinness investors pushed the market capitalisation down from N69.43 billion of August 9, 2021, after the stock price crashed to N31 per share, from N31.70 kobo per share.

International Breweries

The third largest market shareholder travelled same path with its rivals, as profit-taking by International Breweries’ investors caused the company N9.40 billion in investment.

International Breweries’ market value dropped by 7 percent within the bearish four weeks, to settle at N124.90 billion, as of September 3, below the N134.31 billion it was valued for on August 9 – this was caused by the depreciation of the stock price from N5 to N4.65 Kobe per share for both period respectively.

Note that while the sell-off in Nigerian Breweries and International Breweries occurred after the financials of both companies were released, that of Guinness happened weeks into the release.

Business

CAC threatens to shut down PoS operators as deadline for registration expires

The Corporate Affairs Commission has said it will work with law enforcement agencies and other legal means to shut down recalcitrant Sales Operators who fail to register their businesses as its 60-day deadline lapses.

The Commission disclosed this in a notice Friday on its official X handle.

This comes after CAC on July 7, 2024, issued a 60-day deadline which expired on Thursday, September 5, 2024, for all PoS operators to register their businesses.

CAC noted that there was inadequate compliance with its directive, noting that those who decided not to register may be engaging in unwholesome activities.

“The Commission notes inadequate compliance with the directive for formalization when viewed from the background of the large number of POS operators in the country. Those who have taken steps to formalize in line with the Commission’s directive are commended for their positive attitudes.

“Recalcitrant operators have refused to adhere to the advice for formalization due possibly to engagements in unwholesome activities or for some reasons best known to them.

“We are here to make it clear that the Commission is working with Law Enforcement Agencies and other relevant stakeholders to deploy a comprehensive enforcement and sanction framework that may include not only possible shutdown but other severe legal Consequences.”

Meanwhile, the Association of Mobile Money and Bank Agents in Nigeria, AMMBAN, recently challenged the CAC’s registration directive.

Business

Dangote’s petrol to flood market from Sept 15 — NNPCL

The Nigerian National Petroleum Company Limited (NNPCL) has announced that Premium Motor Spirit (PMS), commonly known as petrol, from the Dangote Refinery will begin to flood the market starting on September 15, 2024.

This development follows the refinery’s commencement of petrol refining earlier in the week.

In a statement signed by the NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, on Thursday in Abuja, the company clarified that petrol prices would now be determined by market forces.

The statement addressed speculations about price control, reiterating that the downstream sector had been fully deregulated and that NNPCL would no longer fix fuel prices.

Adedapo Segun, NNPCL’s Executive Vice President of Downstream, emphasised that foreign exchange (forex) illiquidity had been a major factor influencing PMS price fluctuations, which are now regulated by the free market as mandated by the Petroleum Industry Act (PIA).

Segun also noted that the current fuel scarcity should ease within a few days as more filling stations recalibrate their systems and resume selling PMS.

He cited Section 205 of the PIA, which established that petroleum prices are governed by market forces rather than government intervention. The exchange rate, he added, significantly impacts fuel prices.

Regarding the supply of petrol from the Dangote Refinery, Segun stated that NNPCL was preparing for the September 15 timeline when products would be available for distribution.

He assured Nigerians that NNPCL is working closely with fuel marketers to ensure stations remain open and well-stocked to meet demand, while measures are being taken to prevent product diversions.

Segun’s comments come on the heels of the Federal Government’s announcement of an impending boost in petrol supply over the weekend, as vessels had started offloading while reaffirming that PMS prices would not be fixed by the government.

Business

PMS Prices are determined by free market forces—NNPC Ltd

The Nigerian National Petroleum Company Limited (NNPC Ltd.) has stated that foreign exchange (forex) illiquidity has been a significant factor influencing the fluctuation in prices of Premium Motor Spirit (PMS), which are governed by unrestricted free market forces, as provided for in the Petroleum Industry Act (PIA), 2021.

Speaking on TVC News’ “Journalists’ Hangout” show on Thursday, the Executive Vice President of Downstream, NNPC Ltd., Mr. Adedapo Segun explained that the current fuel scarcity was expected to “subside in a few days as more stations recalibrate and begin selling PMS.”

He said Section 205 of the PIA, which established NNPC Ltd., stipulated that petroleum prices were determined by unrestricted free market forces.

According to him, “The market has been deregulated, meaning that petrol prices are now determined by market forces rather than by the government or NNPC Ltd. Additionally, the exchange rate plays a significant role in influencing these prices.”

On the commencement of lifting PMS from the Dangote Refinery, Segun said that the NNPC Ltd. was awaiting the September 15th timeline provided by the Refinery.

Segun, who said no right-thinking individual would be comfortable with the current fuel scarcity, added that the NNPC Ltd. has nearly a thousand filling stations nationwide and was collaborating with marketers to “ensure that stations open early, close late, in order to maintain adequate fuel supply to meet the needs of Nigerians.”

He assured Nigerians: “We are also engaging relevant authorities to ensure products diversions are prevented and timely deliveries to all stations are ensured. The scarcity should ease in the next few days as more stations recalibrate and begin operations.”