Manufacturing, FMCG firms post 25 per cent YTD losses as demand plummets

The crises affecting firms under the manufacturing and fast-moving consumer goods (FMCG) sector may have caused six listed firms an average of 25 per cent loss in their share price valuation in the last seven months.

The companies are Nestle Plc, Dangote Sugar Refinery, National Salt Company of Nigeria (NASCON), PZ Cussons, Fidson and Champion Breweries.

Due to the prevailing FX scarcity, inflationary pressure and other challenges impeding business growth, the profitability of the firms has been affected, resulting from a fall in demand for their products and poor financial performance.

At the end of last year, many listed firms incurred significant FX losses that wiped out their shareholders’ funds pushing them into negative positions. The losses extended into the 2024 half-year performance.

Data from the Nigerian Exchange Limited (NGX) showed that Nestle, with a market capitalisation of N638 billion, started the year with a share price of N1,100. At the close of transactions on Tuesday, August 13, 2024, the share price closed at N805, shedding 26.8 per cent year-to-date (YTD).

Similarly, Dangote Sugar Refinery, which reopened for transactions in January 2024 at a share price of N57, closed on Tuesday at N44, representing a drop of 22.8 per cent loss. The company closed its transactions on Tuesday with capitalisation of N534 billion.

For NASCON with capitalisation of N97.3 billion, its share price dropped by 33 per cent YTD, from N53.75 kobo to N36.

PZ Cussons share price depreciated from N26.70 kobo to N21, shedding 21.4 per cent off the price valuation. The company’s capitalisation is currently put at N83.4 billion.

Fidson Health Care and Champion Breweries with capitalisation of N31.6 billion and N27.2 billion began the year with a share price of N17.50 kobo and N4.15 kobo. The two firms have lost 21.4 per cent and 26.8 per cent of their price valuation YTD to close at N13.75 and N3.04 kobo on Tuesday.

According to the shareholders, firms in the sector would find it difficult to record meaningful profit as the overall hardship, which impacts consumer disposable incomes, is shrinking demand.

Already analysts and stockbrokers have predicted a gloomy outlook for the sector, noting that the huge losses suffered in their half-year operations would extend to a full year, which would ultimately hurt dividend payouts.

Huge losses recorded by companies under the sector majorly due to the FX crisis would continue to impact their balance sheets unless the companies refinance their liabilities through equity injection, experts have said.