COVID-19 shrinks Q3 performance of household sector firms

The devastating impacts of the COVID-19 on income and consumption have affected the nine months performance of companies operating in the household/personal industry.

The sector, like its peers, is faced with challenges ranging from tight consumer spending, poor infrastructure, rising inflation and trade and FX restrictions. 
The factors have been listed as the major challenges affecting the growth of the industry. 

The economic lockdown implemented from April to contain the spread of COVID-19 disrupted business activities, thus slowing down sales. The resultant negative impact on income affected the consumer goods sector. This also took a toll on the activities of quoted companies on the Nigeria Stock Exchange (NSE).

For instance, Unilever’s revenue for the Q3 2020 unaudited results declined by 13.4 per cent to N44.7 billion from N51.6 billion recorded in the corresponding period in 2019.

The company’s loss before tax stood at N2.6 billion while loss after tax was N2.1 billion. Its net assets also declined by 3.1 per cent from N66.5 billion to N64.5 billion.

Chief Executive Officer, Unilever, Alan Jope, said: “COVID-19 continues to influence consumer behaviours and channel dynamics in our markets. In North America, market growth continued to be driven by the elevated demand for foods consumed at home.

“European markets saw a mixed picture on growth and a challenging pricing environment. In China, growth improved slightly compared to the second quarter. After a strict lock-down earlier in the year, India saw a pick-up in economic activity, even though cases of COVID-19 continued to increase. In Indonesia and Latin America, markets contracted in the third quarter.”

Also, PZ Cussons revenue for the Q3 declined by 0.6 per cent to N54.7 billion, from N55.1 billion in the previous quarter. Loss before tax stood at N4 billion while loss after tax was N3.5 billion. Net Assets also grew by -8.6 per cent to N41.8 billion from N45.8 billion.

An independent investor, Amaechi Egbo, said the industry is not operating in isolation hence it is affected by the prevailing socio-economic challenges. He explained that the industry is a reflection of the general state of the economy. 

“If the economy does very well, it will also benefit. If the power sector runs very well, production will improve substantially.

“Sluggish economic recovery, tight consumer spending and widening income inequality have slowed down growth in the consumer goods sector since the 2016 recession.”

He said the inability of the privatised power sector to increase output poses challenges to businesses in the country resulting in higher maintenance and operational costs.