Currency retailers and experts have said the naira will trade slightly below 500 per United States dollar this week despite the commencement of the sale of foreign exchange to Bureau De Change operators by the Central Bank of Nigeria last week.
The CBN had through the International Money Transfer Organisations resumed the sale of dollars to BDCs on Thursday, after stopping it for almost a month due to the Yuletide holiday.
Travelex, one of the IMTOs in the country, sold about $20m to 2,500 BDCs with each getting $8,000, the President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, said.
According to a Reuters report, the naira is seen unchanged on the parallel and official forex markets in the coming days even as the IMTOs continue the sale of dollars to the BDCs this week, boosting greenback liquidity.
The naira was quoted at 498/ dollar at the parallel market on Friday, down from 497 on Thursday. It traded flat at 497/dollar between Monday and Wednesday
On the official market, commercial banks quoted the naira at 305.75 a dollar on Friday, around the same level the local currency has traded at since August last year.
“Once dollar liquidity improves in the market I see the naira trading around 380-400 a dollar in the short-term,” Gwadabe said told Reuters.
The BDC operators are quoting the naira at 399 to the dollar.Read More
The naira fell against the United States dollar at the parallel market to 498 on Thursday, from 497 on Wednesday.
This came hours after the Central Bank of Nigeria resumed dollar sales to Bureau De Change operators through Travelex.
Before dropping to 498, the naira had appreciated to 495/dollar early on Thursday.
The currency traded flat at 497/dollar consecutively between Monday and Wednesday.
Economic and financial experts said the resumption of dollar sales to the BDCs by the CBN through Travelex would help boost the naira.
The local currency has been under persistent pressure owing to scarcity of dollar in the economy.
Economic and financial experts are divided over the outlook of the naira and most economists believe the local currency would continue to fall against the greenback unless the CBN reviewed its monetary and foreign exchange policy.
According to an economic expert, Mr. Henry Boyo, the currency monetary policy framework adopted by the CBN is flawed and there is an urgent need for the central bank to jettison it for a framework that can take the country off the current economic challenges.
He stressed that unless this was done, the rising oil prices would not make the economy better.
Boyo said, “The oil revenue is not the problem; the primary cause of the oppressive dilemma is the distortional process the CBN adopts for infusing the dollar revenue into the domestic money market to drive economic growth.Read More
The Petroleum Products Pricing Regulatory Agency on Thursday denied reports speculating an imminent fuel scarcity over the Federal Government’s inability to pay fuel marketers’ N660 billion debt.
In a statement released in Abuja by the PPPRA spokesman, Lanre Oladele, the agency said the report was misleading and “a gross misrepresentation of facts”.
The statement said: “There were reports that fuel queues may soon return following the Federal Government’s inability to settle marketers’ N660 billion debt and non-availability of foreign exchange to fund fuel imports.
“PPPRA wishes to state unequivocally, that these stories are gross misrepresentation of available facts at our disposal, hence misleading.
“For the avoidance of doubts, the National Petroleum Products Stock data and import plan, currently indicate that the country has two months Premium Motor Spirit (petrol) sufficiency.
“Hence, we want to assure motorists and commuters alike, that the products supply situation is robust and able to cater for the fuel needs of all Nigerians, pending when ongoing challenges are addressed.
“As a corollary to the above, PPPRA also wants to inform that contrary to a widely-held belief on the status of kerosene, the product is fully deregulated.
“We hereby appeal to all Nigerians to remain calm and desist from any form of panic-buying, as we assure of our total commitment to adequate products supply and distribution across the country, in line with our mandate.”
Oladele appealed to all depot owners to adhere strictly to the subsisting truck-out principle in order to ensure that products get to retail outlets across the country in a seamless manner.
“The Agency shall not hesitate to apply appropriate sanctions where necessary,” he warned.
According to verified reports, the Central Bank of Nigeria (CBN), has ruled out transactions in bitcoin and other virtual currencies by any bank in the country.
The apex bank, in a circular to all banks on Tuesday, signed by its Director of Financial Policy and Regulation Department, Kelvin Amugo, said the move was necessitated by money laundering and terrorism financing risks inherent in operations of virtual currencies.
Amugo added: “The emergence of Virtual Currencies (VCs) has attracted investments in payments infrastructure that provides new methods of transmitting value over the internet.
“Transactions in VCs are largely untraceable and anonymous making them susceptible to abuse by criminals, especially in money laundering and financing of terrorism.
“VCs are traded in exchange platforms that are unregulated, all over the world. Consumers may, therefore, lose their money without any legal redress in the event these exchanges collapse or close business.
“The development of VCs Payment Products and Services (VCPPS) and their interactions with other New Payment Products and Services (NPPS), give rise to the need for guidance to protect the integrity of the Nigerian financial system. There is, therefore, the need to address the Money Laundering/Terrorism Financing risks associated with VC exchanges and any other type of institutions that act as nodes, where convertible VC activities intersect with the regulated fiat currency financial system.
“The attention of banks and other reporting financial institutions is hereby drawn to the above risks and you are required to take the following actions pending substantive regulation or decision by the CBN.”
CBN, therefore, advised banks to ensure that they do not use, hold, and transact in virtual currencies.
The apex bank also warned the banks to ensure that existing customers that are virtual currency exchangers have effective AML/CFT controls that enable them to comply with customer identification, verification and transaction monitoring requirements.
“Where banks or other financial institutions are not satisfied with the controls put in place by the virtual currency exchangers/customers, the relationship should be discontinued immediately; and any suspicious transactions by these customers should immediately be reported to the Nigerian Financial Intelligence Unit (NFIU),” the CBN said.
The apex bank stressed that virtual currencies such as Bitcoin, Ripples, Monero, Litecoin, Dogecion, Onecoin and similar products are not legal tenders in Nigeria, thus any bank or institution that transacts in such business does so at its own risk.
The apex bank’s directive is coming after the Securities and Exchange Commission, SEC, issued a warning against virtual currencies.
“Given that these instruments and the persons, companies or entities that promote them have neither been authorized, nor any guidelines/regulations developed for them by any of the regulatory authorities in Nigeria, there is no protection available to users or investors in these virtual currencies from financial losses if the virtual currencies fail or the companies promoting them go out of business,” the commission had said.
Vice President Yemi Osinbajo has disclosed the Federal Government is currently conversing with the Central Bank of Nigeria (CBN) to close the gap between foreign exchange rates at the official and parallel markets.
“The gap between the official and parallel markets isn’t helpful,” Reuters quoted Osinbajo as saying to reporters at the World Economic Forum in Davos, Switzerland.
“If you look at economic recovery and growth plan, it is the expectation that this is a conversation we are having with central bank,” he said.
The vice president, who was in the Niger Delta last Monday and early Tuesday, led the country’s delegation to the forum where pivotal issues concerning the Nigerian and global economy will be addressed.
Laolu Akande, Special Assistant to Osinbajo on Media and Publicity, said via a statement that the vice president would be accompanied by Adeyemi Dipeolu, Special Adviser on Economic Matters to the President.
“At the forum, the vice president will lead a discussion on Business in Nigeria, where ministers from the Federal Cabinet who are members of the Nigerian delegation would also feature,” the statement read.
“The yearly forum, which draws together governmental and business leaders around the world to discuss economic issues and review developments, is normally composed of panel discussions, country/continent-specific themes and other subjects.”
Aliko Dangote, Africa’s richest man, and Akinwumi Adesina, President of the African Development Bank (AfDB), will also be at the forum.
Meanwhile, Osinbajo has hinted that Nigeria hopes to sell Eurobonds worth $1 billion in March. The euro-denominated issue would come rather in March than February, he told reporters at the World Economic Forum in Davos, Switzerland.
SOURCE:PREMIUM TIMESRead More
British American Tobacco agreed Tuesday to pay almost $50bn for control of US firm Reynolds American, creating the world’s largest listed tobacco company.
BAT will purchase the 57.8-percent of Reynolds American that it does not already own, BAT said, unveiling an improved cash-and-shares offer after the US giant had rejected its previous $47-billion bid.
The deal brings together a raft of global brands, including BAT products Lucky Strike, Rothmans and Kent, and Reynolds’ brands such as Newport, Camel and Pall Mall.
The combined company will have a strong foothold in the United States, and a significant presence in high-growth markets including South America, the Middle East and Africa.
BAT added it would also create a “truly global” business for fast-growing next generation products (NGP) like e-cigarettes or vaping.
“We are very pleased to have reached an agreement with … Reynolds and we look forward to putting the recommended offer to shareholders,” said BAT Chief Executive Nicandro Durante in a statement.
He added that the blockbuster deal “will create a stronger, global tobacco and NGP business with direct access for our products across the most attractive markets in the world”.
“We believe this will drive continued, sustainable profit growth and returns for shareholders long into the future.”
Reynolds shareholders will receive $29.44 in cash and 0.5260 BAT ordinary shares, under the terms of the transaction.
That represented an increase of 26 percent compared with the closing Reynolds share price on October 20 — the day before BAT’s unsuccesful bid.
The offer comprises $25 billion worth of BAT shares and $24.4 billion in cash and values the entire Reynolds group at more than $85 billion.
BAT forecasts that it will make at least $400 million in annualised cost savings following the purchase, while the deal remains subject to shareholder and regulatory approvals.
The London-listed firm plans to expand further in the vaping and e-cigarette market — where it is already the largest international company outside the US — adding Reynolds’ popular Vuse vapour brand to its portfolio.
Major global tobacco companies are smoking out emerging markets to offset sliding demand in Western Europe, where high taxes, public smoking bans and health worries have persuaded many people to give up or turn to e-cigarettes, battery-powered devices that heat a nicotine liquid.
The world’s biggest cigarette producer by market share is the state-owned China National Tobacco Corporation, followed by Marlboro maker Philip Morris International.
However, BAT says the Reynolds deal will create the biggest listed tobacco firm by net turnover and operating profit.
Reynolds is the second biggest player in the US market and has three out of the four top-selling cigarette brands.
Heavy transactions in the shares of some banks, especially Fidelity Bank Plc and Diamond Bank, last week, lifted the volume of shares traded, as a turnover of 1.117 billion shares worth N9.041 billion was recorded in 16,482 deals by investors on the floor of the Exchange.
This volume of shares traded, was, however, higher than a total of 4.319 billion units, worth N7.376 billion that changed hands in 9,330 deals during the preceding week.
Specifically, the financial services industry (measured by volume) led the activity chart with 903.696 million shares valued at N3.336 billion in 9,240 deals; thus contributing 80.88 per cent and 36.90 per cent to the total equity turnover volume and value respectively.
The conglomerates industry followed with 67.147 million shares worth N109.014 million in 609 deals. The consumer goods industry ranked third with a turnover of 59.710 million shares worth N4.002 billion in 2,686 deals.
Trading in the top three equities namely – Fidelity Bank Plc, Omoluabi Savings and Loans Plc and Diamond Bank Plc (measured by volume) accounted for 299.270 million shares worth N277.933 million in 1,029 deals, contributing 26.79 per cent and 3.07 per cent to the total equity turnover volume and value respectively.
Also traded during the week were a total of 2,443 units of Exchange Traded Products (ETPs) valued at N730,619.05 executed in 23 deals, compared with a total of 55 units valued at N505.65 transacted last week in 11 deals.
A total of 5,200 units of Federal Government Bonds valued at N5.004 million were traded this week in five deals, compared with the 5,100 units valued at N5.120 million transacted last week in two deals.
The NSE All-share index and market capitalisation appreciated by 0.28 per cent to close the week at 26,325.93 and N9.058 trillion respectively.
Similarly, all other Indices finished higher during the week except the NSE-Main Board, NSE Insurance, NSE Consumer Goods, NSE Oil/Gas and NSE Lotus II indices that depreciated by 0.39 per cent, 0.34 per cent, 1.82 per cent, 3.15 per cent and 1.87 per cent respectively
About 31 equities appreciated in price during the week, higher than 18 equities of the previous week. However, 34 equities depreciated in price, higher than 31 equities of the previous week, while 110 equities remained unchanged lower than 126 equities recorded in the preceding week.
US fast-food giant McDonald’s will sell a controlling stake in its China and Hong Kong business for up to $2.08 billion to a consortium including state-owned Citic and the Carlyle Group, it was announced Monday.
The deal is part of an international turnaround plan as McDonald’s struggles with sluggish growth at home.
Citic Limited, Citic Capital Holdings, Carlyle Group and McDonald’s will form a company that will act as franchisee for the chain’s business in mainland China and Hong Kong for 20 years, the companies said in a joint statement.
Citic is a vast Chinese state-owned conglomerate with interests in businesses ranging from energy and manufacturing to real estate.
It said in a statement to the Hong Kong Stock Exchange that the purchase would deepen its exposure to China’s consumer sector, “which is poised to be the main driver of China’s economy for decades to come”.
The burger chain last year announced plans to sell its over 2,600 restaurants in China and Hong Kong, after sales took a hit as tensions in the South China Sea hit earnings by US companies in the country.
Its China business also suffered a blow in 2014 after a food safety scandal involving one of its meat suppliers.
Citic and Citic Capital will have a stake of 52 percent, Carlyle will take 28 percent and McDonald’s will retain 20 percent of the new company.
It will focus on growth in China’s smaller regional cities and plans to open more than 1,500 restaurants in the mainland and Hong Kong over the next five years.
The burger chain has been overhauling its global structure under chief executive Steve Easterbrook to compensate for slower growth in markets such as France and the US, its largest market.
The global restructuring plan calls for refranchising 4,000 restaurants by the end of 2018, with the long-term goal of franchising 95 percent of its outlets.
The new company will focus on menu innovation and enhanced restaurant convenience, and McDonald’s existing management team will continue to lead the business, the statement said.
McDonald’s opened its first restaurant in mainland China in 1990 and currently employs over 120,000 people, it said, adding that the fast-food chain is the country’s second-largest.
It was one of the largest-ever China deals for asset manager Carlyle, which has invested more than $7 billion of equity in the world’s second-largest economy, according to the statement.
The deal is expected to be closed in mid-2017 pending regulatory approval.
Rival Yum Brands, owner of KFC, Pizza Hut and Taco Bell, last year split off its $6.9 billion China business into a separate company, Yum China, to focus on its huge but struggling restaurant empire in the country.
The Nigerian Naira against the United States dollar at the parallel market on Friday has fallen to 493, from 490 on Thursday as increased dollar demand weighed on the market.
Forex traders said the local unit plummeted following an increased demand for the dollar and other hard currencies by parents seeking to pay school fees of wards studying overseas.
The naira had closed flat against the dollar at the official interbank window and at the parallel foreign exchange market last Tuesday, the first official trading day of the year.
It closed at 305 to a dollar at the official window, the same rate it closed on the last working day of 2016, while the local currency closed at 490/dollar on the black market.
The naira had similarly closed at 490/dollar on Friday, the last official trading day of 2016.
“In the week ahead, we expect pressure on the naira to linger, especially at the parallel market, as unmet demand from the official market continues to stoke imbalances,” United Capital had said in a research note to clients on Tuesday.
The local currency also closed flat at 490/dollar last Wednesday and Thursday at the parallel market, before recording loss on Friday.
Economic and financial experts have expressed divergent views over the outlook of the naira this year.
The naira beat analysts’ expectation and closed the year 2016 at 490 against the dollar at the parallel market.
Due to the persistent pressure on the naira, currency and financial analysts had predicted that the local currency would hit 500/dollar on or before the new year.
The naira has been under severe and continuous pressure as the scarcity of the US currency continues to create ripples in the financial markets and economy.
The CBN had about two weeks ago sold about $1bn on the forward market to clear a backlog of dollar obligations in selected sectors.
Traders said the CBN told banks to prioritise airlines, manufacturing firms, petroleum products importers and agriculture, the sectors worst hit by the dollar shortage, in the auction.
The CBN has struggled to support the naira as the country’s external reserves continue to fall.
According to PREMIUM TIMES Nigeria, Dangote Cement remains the most capitalized company on the Nigerian Stock Exchange (NSE), as at December 16, 2016, with a market capitalization of N2.9 trillion.
This represents 31.56 per cent of the whole stock market capitalization as at December 16, 2016. Nigerian Breweries and Nestle Nigeria, all in the manufacturing sector, trailed Dangote Cement with market capitalization of N1.13 trillion and N642.05 billion respectively.
The recurrent expansion of Dangote Cement’s manufacturing capacity in its plants based in Nigeria and across Africa to meet the increasing demand for its products continues to reflect in its top and bottom lines. This is despite the high cost associated with investment in capacity building to sustain future growth by increasing market share beyond the shores of Nigeria.
The company’s track record of strong earnings and share price has helped it to outperform the whole market in terms of relative price stability and as the most capitalised equity on the floor of the Nigerian Stock Exchange.
Its current share price at N170 per share has been considered cheap and attractive by stock market analysts.
They noted that 2016 year end will be another impressive full year result despite the harsh business environment.
They are of the view that backed with its expansion drive to other African countries, the company is currently consolidating its position, while growing sales revenue with robust profitability.
The managing director of APT Securities and Securities Limited, Mallam Kurifi Garuba, said the stake controlled by Dangote Cement on NSE is highly significant.
According to him, this is why Dangote Cement, for instance, determines the direction of the market most times. Whenever there is any price drop in Dangote Cement, the market will decline and if there is any rise in shares of Dangote Cement, the market closes positively.
A look at the company’s scorecard for the five-year period, 2011 to 2015, the increased capacity to satisfy Nigeria’s rising demand for cement, estate development and other infrastructure development have put an end to historical reliance on imports. Today, Nigeria has been turned into a net exporter of cement as reflected in the company’s increasing number of millions of metric tons produced per annum and earnings released.
The regular release of its financials in compliance with the post listing requirement makes DangCem’s corporate governance strong, such that investors can forecast and plan their investment.
Meanwhile, the sales revenue of the company for the period under review grew consistently from N235.91 billion a year after it was listed on the NSC to N491.73 billion, an increase of 108.35 per cent. Also, its bottom line was up by 44.01 per cent to N181 billion from N125.91 billion in 2011 after it hit a profit level in excess of N200 billion in 2013.
The shareholder’s funds for the period was up by 117.94 per cent from N295.83 billion in 2011 to N644.72 billion.
The company recorded a Price Earnings Ratio of 13.99x in 2015, reducing investors waiting period from all time high of 17.71x in 2013 and 16.30x in 2014 respectively. On the other hand, the said earnings per share was same as 7.32 per cent of its price at the released date.
The book value as at the last financial year was N37.84, the highest so far in the company’s existence as a quoted entity. This is however relatively low, compared to its market value. The growing net assets and robust retained earnings would further boost the company’s business to earn more and grow shareholders’ funds.
The estimated ratio also reveals that Dangote Cement’s profit margin for the period has consistently been above the benchmark internationally, ranging from 36.82 to 53.37 per cent. This is healthy and shows the commitment of management to reduce cost and in the process support profitability that would create value for its shareholders.
On the strength of the figures posted, the stock is fairly priced at N240 each, considering fund managers and investor’s preference for consistent dividend, competent management to drive profitability and business model of the company
In the last five years, the company has consistently rewarded shareholders with dividend, supported by improving numbers. Within the period under consideration, it had paid a total dividend of N25.25 per share, excluding the bonus of one new ordinary share for 10 given in 2011.
Speaking at forum in Lagos recently, Dangote said the company has recorded a 47 percent growth in sales volumes between January and February 2016.
He said the company can export up to $500 million worth of cement annually from Nigeria to neighboring West African countries. He disclosed that 2018 to 2020 there will be no need by Dangote Group of businesses to get foreign exchange from the Central Bank of Nigeria (CBN).
The company in September 2016, has made it known that it has turned to locally-mined coal to power its plants in a bid to end disruptions caused by gas shortages and lower its production costs.
The president of the Dangote Group, Aliko Dangote said, “All our cement plants have been converted to coal,” adding they would use 12,000 metric tonnes of coal each day.
Dangote’s move is unusual in an era when power generation is shifting away from coal. Coal used to generate U.S. power fell in April to its lowest monthly level since 1978, the U.S. Energy Information Administration said in a June report.
Also, the managing director of Dangote Cement, Mr. Onne Van der Weijde, said the management is confident of delivering strong growth this year despite the challenging economic conditions facing Nigeria and the rest of Africa.
He said the company achieved particularly strong sales growth in Nigeria but expect the final quarter to be lower because of the high fourth quarter base in 2015 and also because of the price increase that became effective on 1st September 2016.
He said: “This price increase will have an immediate and positive impact on margins in fourth quarter, as will the elimination of LPFO from our fuel mix, as we increase our use of coal and as higher gas levels return. We do not expect to use LPFO again this year. From January 2017, our use of own-mined coal, sourced in Nigeria and paid for in Naira, will further improve margins and significantly reduce our need for foreign currency.
“As we have previously made clear, our focus will be to improve margins through cost controls and the adjustment of prices. We have new capacity coming on stream in Congo and Sierra Leone and expect Tanzania to increase its market share in the coming months.”
Weijde disclosed that foreign exchange constraints in Nigeria have made them to reconsider the pace of expansion and they now believe that a longer-term building programme will enable a more measured approach that balances their ambition for growth with the realities of obtaining foreign currency in this difficult environment.