TheCable

Companies faced a general pattern of rising cost-income ratio and shrinking profit margins in the 2016 financial year. Inability to grow sales revenue and profit can be expected to the general earnings story of companies, as corporate earnings results season approaches. In the midst of the operating difficulties, some companies have moved up on the top earnings ladder and some have dropped out. The top earning companies by earnings per share include industry leaders that are thriving on brand loyalty. This is the case in industries such as breweries, food/beverages and cement.

Some of the top earning companies also belong to industries where they have captive or underserved markets such as oil palm industry. The dominant members of the top 10 group are petroleum marketers that seized the opportunity of revenue improvement to stretch out profit margin. The banking sector, which was missing in the earlier ranking based on the first quarter reports, has made two entries on the top earnings league at the end of the third quarter.

Total Nigeria has taken over the position by earnings per share among listed companies, pushing aside Nestle Nigeria, which has held the position for many year. Total was bidding seriously for the number one position at the end of the first quarter of the year and huge exchange losses sustained by Nestle in the second and third quarters threw the food/beverages company out of the top 10 earnings table.

Total Nigeria has maintained a high growth momentum all the way from the first quarter of the year and has so far reclaimed the position of the leading company by earnings per share. It used to occupy the position until 2009 when the oil price drop weakened its earning capacity. The company closed third quarter operations with earnings per share of N34.26 – more than four times the N8.16 in the same period in the preceding year.

The company stepped up sales revenue growth in the course of the year and achieved a top growth record of 38% year-on-year at the end of the first quarter. It achieved an exceptional rise of over 320% in net profit to N11.63 billion. This is nearly three times the N4.05 billion after tax profit the company reported at the end of 2015. Full year projection indicates the company may push net profit four times over the last year’s figure to N16 billion.

The oil marketing company is looking forward to posting the most outstanding earnings performance in many years. The company earned N11.92 per share at the end of 2015 and paid out a cash dividend of N14 per share. The exceptional growth in earnings per share anticipated from the 2016 operations is about the most promising corporate earnings result for investors for the 2016 financial year.  Earnings per share may hit N50 based on the full profit estimates.

Mobil Oil Nigeria has moved up from the 3rd to the 2nd position among the leading companies by earnings per share. It closed the third quarter operations with earnings per share of N15.93, improving from N10.12 per share in the same period in the preceding year. The petroleum company saw a big boost in sales revenue last year with a turnover of N71.87 billion at the end of the third quarter – a growth of 58.6% year-on-year.

The company achieved an outstanding growth of over 56% in after tax profit to N5.74 billion at the end of the third quarter with a full year estimate of N7.93 billion. That will be a leap of 63% from the profit figure of N4.87 billion the company reported at the end of 2015.

Mobil Oil is the leading petroleum marketing company by profit margin – which towers above others at 8% at the end of the third quarter. The company is expected to lift profit to a new peak this year after a drop last year with earnings per share likely to stand at about N22 at full year – a clear 63% increase from the N13.51 the company reported in 2015.

Dangote Cement comes on the 3rd position among the top 10 earning companies as per the latest 2016 interims. The cement manufacturer reported earnings per share of N8.13 at the end of the third quarter, which is a decline from N9.80 the company earned in the same period in 2015. The company closed the third quarter with sales revenue of N442.09 billion, a top growth record of 21% year-on-year.

The company reported an after tax profit of N133.52 billion at the end of the third quarter, a drop of 15.5% year-on-year. The full year after tax profit is estimated at N180.2 billion for Dangote Cement for 2016, indicating that the drop at the end of the third quarter would thin down to a marginal slip at the end of the year. Earnings per share is expected to slip from N10.86 at the end of 2015 to N10.56 in 2016.

Presco, the oil palm producer, has advanced its position on the ranking, taking the 4th position with earnings per share of N6.80 at the end of the third quarter. This is a big leap from N3.46 per share the company earned in the same period in 2015. The company’s earnings growth accelerated considerably in the third quarter and multiplied the 2015 full year profit close to three times at the end of September.

Presco is expected to close the 2016 financial year with a new revenue peak and the biggest profit figure in several years. The company lifted after tax profit by 98% year-on-year to N6.80 billion at the end of September. That represents a clear 193% above the full year figure of N2.32 billion at the end of 2015. It earned N6.80 per share at the end of September, rising from N3.46 in the same period in 2015. The full year expectation is N7.50 per share for Presco.

MRS Oil, the third petroleum marketer on the top earnings league, follows on the 5th position with earnings per share of N4.61 at the end of the third quarter. The difference the company has made on the earnings table this year has come from an improvement in sales revenue and a drop in finance cost. Turnover grew by over 27% and finance cost, which caused a loss in the third quarter of last year, dropped by 21% at the end of September. This improved the company’s position wit a big rise of over 60% in net profit to N1.17 billion at the end of the third quarter. This promises a big leap in profit at full year and a projected earnings per share of N6.15. The company earned N3.68 per share at the end of 2015.

Okomu Oil Palm, the second company from the agricultural sector, ranks 6th on the table with earnings per share of N4.38 at the end of the third quarter. The company achieved an impressive growth of 41% in sales revenue in the third quarter and profit rose by over 89% to N4.17 billion during the same period. Sales revenue is expected to grow stronger in 2016 than any time since 2011. The company is driving high growth for the second year after doubling profit in 2015. The strong growth in profit is expected to be maintained to full year with earnings per share projected at N5.56 at the end of 2016. The company earned N2.36 per share in 2015.

Guaranty Trust Bank takes the 7th place on the top 10 table with earnings per share of N4.24 at the end of the third quarter with a full year expectation of N5.47. The bank experienced a windfall that lifted after tax profit by 60% year-on-year to N119.93 billion at the end of September and 21% above the 2015 full year figure. After tax profit is estimated at N161 billion for GTB at the end of 2016, an expected top growth record of 62% over the closing figure of N99.44 billion in 2015. The bank posted gross income of N329.28 billion at the end of the third quarter operations, a growth of 45.6% year-on-year. The strongest revenue growth in many years is expected from the bank in 2016.

Zenith Bank is the 8th company by the size of earnings per share, having earned N3.18 at the end of the third quarter. The bank is expected to close the 2016 financial year with earnings per share of N4.20 against N3.36 in 2015. There was a strong growth in earnings in the third quarter and the bank earned more than 55% of the N100.07 billion net profit at the end of September within the three months of the third quarter. After tax profit had grown by 20% from an increase of 13% in gross earnings to N380.35 billion at the end of September. Stable growth in revenue and a gain in profit margin were the key strengths of Zenith Bank in 2016.

Nigerian Breweries takes the 9th position on the top 10 earning companies in 2016 with earnings per share of N2.54 at the end of the third quarter. This is a drop from N3.30 in the same period last year, as profit performance was undermined by finance expenses, which nearly doubled at the end of the third quarter. Growth in sales revenue was moderate at 3.6% and with rising costs, the company lost profit margin in 2016. After tax profit dropped by over 23% to N20.11 billion at the end of September and a wider margin of decline is likely at full year. Earnings per share is estimated at N3.47 for the company at full year against N4.82 in 2015.

Flour Mills of Nigeria comes next on the 10th position with earnings per share of N2.23 at the end of its second quarter ended September, 2016. This is a sharp drop from N9.0 per share the company earned in the same period last year, as profit dropped by 73%. It is expected to earn N4.29 per share at full year against N5.57 in the 2015/16 full year. The company closed the second quarter with a turnover of N255.30 billion, which is an outstanding growth of 43.8% year-on-year. It is expected to achieve the strongest revenue growth in three years in the current financial year ending March 2017. An improvement in gross profit and a drop in finance cost have enabled the company to improve operating profit. The sharp drop in profit in the second quarter is expected to thin down to below 14% at full year.