20 July 2018 ( Lagos ) :On an annualized basis, Q2 sales and PBT came in slightly behind consensus estimates of N965bn and N371bn respectively. As such, analysts anticipate moderate downward adjustments to consensus 2018E PBT forecast. However, analysts expect a negative reaction by the market on the back of the relatively weaker profits delivered this quarter.   

On a positive note, Q2 sales of N240bn were up 18% y/y, driven primarily by unit volume growth of c.12.5% y/y to c.6.2 million tonnes. On a segmental basis, sales in Nigeria which were up 22.4% y/y to N170bn. Analysts anticipate consistent volume growth through H2 following the approval and passage of the 2018 federal budget. Other positives were a gross margin expansion of +217bp y/y to 58.3% and a 282% y/y rise in other income.  

On the downside, Q2 PAT came in behind analyst's estimate by c.37%. The main driver behind this variance was a negative surprise on the net finance expense line on account of fx-related losses of –N15.4bn. According to management statements, fx gains recognised in 2017 were reversed due to a restatement of results. Operating expenses were up 30% y/y and 10% q/q to N45bn.  

Source : Gregory Kronsten, Olubunmi Asaolu, Chinwe Egwim from FBNQuest Capital Limited.

Reporting for EasyKobo on Friday, 20 July 2018 in Lagos, Nigeria