Stock: Consumer Goods Firms Lose N923bn In Q1
Investors in consumer goods companies quoted on the nation’s stock market lost about N923bn in the first quarter of the year following market apathy as COVID-19 pandemic began to take a toll on the economy.
The market sentiment of the sector, which comprises segments such as automobiles/auto parts, beverages, food products, household durables and personal/household products, among others, have remained on the decline following series of lockdown crippling the economy.
Checks by our correspondent revealed that the sub-sector recorded a loss of N923bn or 40.84 per cent to close at N1.337tn in market capitalisation on March 31, 2020 as against N2.26tn at the beginning of trading on January 2.
Further investigation on monthly basis revealed that shareholders of the companies recorded a loss of about N131bn or 5.79 per in January 2020 to close at N2.129tn on January 31, 2020 as against an opening figure of N2.260tn.
For the month of February, the sector lost N249bn to close at N1.880tn as against N2.129bn reported on January 31, 2020, an 11.69 per cent drop.
As the cases of COVID-19 pandemic rose, consumers’ incomes were adversely impacted.
Investors lost N543bn or 28.88 per cent in March as the sector closed at N1.337tn from the opening figure of N1.880tn as of February 28, accounting for the highest loss recorded in the first quarter.
Speaking recently at an interactive session for the consumer sector, the Chief Executive Officer of the Nigerian Stock Exchange, Mr Oscar Onyema, said, highlighted the challenges faced by manufacturing concerns.
He said, “Over the last few years, Nigeria’s economic landscape has been particularly challenging for the manufacturing sector and particularly the consumer goods industry.
“Despite the implementation of different industrial policies and industrialisation strategies like the import substitution policy, export promotion strategy and foreign private investment-led industrialisation, the sector has experienced policy reforms and directives that have negatively impacted on the performance of the sector’s value chain.”
A recent survey conducted by REACH Technologies, a Nigeria-based fintech, on behalf of FBNQuest, corroborated findings from the National Bureau of Statistics COVID-19 impact survey that consumers had fallen on harder times.
“We infer from the survey that income levels are down by an average of 30 per cent since March, while job opportunities are fast disappearing. Another sticking point is that consumption of non-essentials has been cut drastically.”
Respondents stated that they had reduced spending on higher value category items by 22 per cent since March.
Although overall consumption has reduced since the pandemic started, the least spending cuts were made on food and health, which respondents viewed as most essential.