22 Sep

Daily Watch – Flour Mills takes advantage of floating naira, Guiness, not so…

  • President Muhammadu Buhari said his administration would ensure that “Nigeria does not slip back into a lazy and dangerous dependence on the price of crude oil” again. In an op-ed for Bloomberg View published Wednesday, Buhari expressed optimism that “Nigeria is on the rise” and his government has set enviably workable modalities to drive the economy out of recession and reposition the country and Africa as a destination point for every investor. The speech was published as he and other African heads of state met with US President Barack Obama at the US-Africa Business Forum on the sidelines of the UN General Assembly in New York.
  • Nigeria’s three tiers of government shared ₦510.270 billion for the month of August from the Federation Account, an increase of ₦16.442 billion over the ₦493.828 billion shared by the federal, state and local governments in July. Speaking at the end of the FAAC meeting, Finance minister, Kemi Adeosun, said gross statutory revenue of ₦315.045 billion for August was higher than the ₦287.819 billion received in the previous month, adding that crude oil exports increased by 2.2 million barrels in May despite the brief force majeure declared at the Qua Iboe and Bonny Terminals and a subsisting force majeure at Forcados. She said the sum of ₦6.330 billion was refunded by the NNPC to the federal government, adding that ₦35 billion PPT was proposed for distribution for August (including VAT), bringing the total to ₦510.270 billion. Adeosun also said the Excess Crude Account currently stands at ₦2.92 billion.
  • The FMDQ OTC Securities Exchange has facilitated ₦71.49 trillion in fixed income securities and currency transactions in the last eight months, according to a Thisday data analysis. Investors made ₦61.74trillion in transactions between January and July, while ₦9.75trillion was invested in August. A further analysis of August’s performance showed that activities in the forex market accounted for 23.29 percent, down by 27.56 percent recorded in July, while FGN2 bonds and Unsecured Placements/Takings accounted for 2.92 percent (July – 3.79 percent), and 4.06 per cent (July – 3.99 percent) of total turnover respectively. T.bills transactions accounted for 33.02 percent (July – 33.60 percent) of total turnover while Secured Money Market [Repurchase Agreements (Repos)/Buy-Backs] accounted for 36.65 percent (July – 31.00 percent).
  • Flour Mills of Nigeria has exported 10 percent of its locally processed soya bean products for the first time to feed mills in Europe and North Africa, its chairman said, helped by a weaker naira. It exported 15,000 tonnes of soya bean products from its plant in Ibadan, John Coumantaros told Reuters, after Nigeria floated its currency in June, which made the company’s products competitive abroad. The naira has lost a third of its value after the central bank floated it to preserve dwindling foreign reserves and resolve chronic dollar shortages caused by an oil price slump, which has frustrated businesses. Flour Mills’ plant, one of the largest soya bean mills in Africa, mills about 150,000 tonnes of soya beans a year into ingredients used for animal feed and vegetable oil, Coumantaros said. He declined to say how much the exports fetched but said improved earnings in the first quarter reflected the export revenues. Nigeria’s biggest flour miller posted a first-quarter profit of ₦5.87 billion in August, up 393 percent from a year ago.
  • Guinness Nigeria said on Wednesday it had received a $95 million loan from parent Diageo to help it cope with dollar shortages in the West African country caused by a slump in crude prices. Chief finance officer Ronald Plumridge said the company’s currency needs were much bigger than it was able to source locally and from its exports and so Diageo had stepped in with the loan. The loan was priced at 3-month LIBOR plus 4.75 percent, he said. “Longer term we intend to source raw materials locally,” Plumridge told an analysts’ call. Guinness Nigeria on Tuesday recorded a pretax loss of ₦2.35 billion for 2016, its first loss in 30-years, hit by declining sales, dollar shortages and domestic inflation running at an 11-year high of 17.6 percent. It said it would cut its total dividend to ₦0.50 for 2016 from ₦3.20 a year ago and also cut 310 staff in the last quarter of the year.