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Panic as Unilever, PZ threaten to leave Nigeria
05 Feb. 2009 00:00
Dipo Kehinde, Segun Adeleye & Segun Edwards
Unilever Plc and... Paterson Zochonis (PZ) Plc are considering pulling out of Nigeria, with possible relocation to neighbouring, Ghana because they could no longer bear the loss to business from the continued deplorable state of basic infrastructure in the country.
The companies are about to join the list of over 150 multinational industries that have divested from the economy since 1995.
According to the Nigerian Compass investigations, more than 60 per cent of local industries, mostly small scale enterprises, folded up since 1986, when the Structural Adjustment Programme (SAP), was introduced.
Going by official statistics, the organised private sector shed 131,000 jobs in 1997 alone, while 70,000 jobs were lost in the public sector. The figures have multiplied since then.
According to their official sites, both companies have combined workforce of 5,249 staff. PZ has a workforce of 3,775 in Nigeria, while Unilever has 1,474 employees.
There is anxiety in the business circle that the exit of the multinationals would further bring the economy to its kneels.
Both Unilever Plc and PZ Plc have been existing in Ghana.
According to sources, if they pull out of Nigeria, they would only need to expand their operations in the neighbouring country to sustain the Nigerian market which is their biggest in Africa.
Nigerian operations have consistently contribute a high proportion of PZ Cussons group’s earnings in recent years. But the complaint remains that the cost of production has hit the roof, due to the cost of self-generated power. A reliable source said PZ would not likely make a public announcement that it would pull out of Nigeria, but it is considering disposing its stock of raw materials and expanding its operations in Ghana.
The calculation of the firms that are finding Ghana attractive is that with the Economic Community of West African States’ free trade treaty, they can easily ship their goods back to service the Nigerian local market.
While Nigeria with over 6,000 megawatts (MW) of installed capacity of electricity power could barely generate 2,000MW, Ghana has been enjoying uninterrupted power supply for over 10 years. Energy experts say Nigeria, with a population of over 140 million, needs over 60,000MW to be self sufficient in power supply.
Comparatively, South Africa, with a population of 48 million can boast of over 39,500MW from Eskom, the counterpart of Nigeria’s NEPA.
Besides, inadequate power supply which cost billions of naira, Unilever and PZ are also said to be indifferent to the multiple taxations regime in Nigeria, which has also reduced their profits drastically.
On the implication of the possible relocation of the two firms to their shareholders, since they are listed on the Nigerian Stock Exchange (NSE), a shareholder and leader of the Progressive Shareholders Association of Nigeria (PSAN), Mr Boniface Okezie said: “If it is true that the companies want to relocate, which is possible because they owe their shareholders the obligations to return value through returns, they may seek de-listing from the Exchange and value the worth of every shareholders’ in the company to be able to pay them off.”
According to him, government should, as a matter of urgency, intervene in the issue of the deplorable situation of basic infrastructure in the country.
He said that the same problem forced all the textile factories out of business, while the promise by government to bail out the industries with a proposed N70 billion intervention funds is yet to be fulfilled.
One of the listed companies in the stock market, CFAO, applied to the NSE for de-listing, over inability to continue to fulfil its obligations to shareholders two years ago, while shareholders were paid off.
According to sources, a possible relocation of PZ and Unilever from Nigeria would greatly hurt the economy in view of their operations that spread across the country, where they sustain many small businesses and families.
PZ Cussons Nigeria Plc is currently the largest subsidiary of PZ Cussons. It has over 100 years’ experience of trading in Africa and has enjoyed tremendous business success in Nigeria with a strong portfolio of local brands. The company’s tentacles spread to almost every state in the country.
It’s operations started in 1879, when George Paterson and George Zochonis set up a trading post in Sierra Leone.
In 1899, Paterson Zochonis (PZ) opened a branch office in Nigeria and acquired its first soap factory in the country in 1948.
In 1973, PZ entered the detergent and refrigerator markets, simultaneously in Nigeria. And in 2003, PZ Cussons Plc entered into a joint venture (Nutricima) with Glanbia Plc to supply evaporated milk and milk powder in Nigeria, two years later the Nutricima JV commenced manufacturing in Nigeria.
With 3,775 employees in Nigeria as against 556 in Ghana and 292 in Kenya, the group’s product lines, the main brands, include - Elephant Blue Detergent, Zip, Jet, Tempo, Rex, Morning Fresh.
Others are soaps, pharmaceuticals, balms, skin and baby care products including: Premier, Imperial Leather, Joy, Duck, Canoe, Drum, Super Atlas, Maladrin, Zubes, Robb, Heatol, Super Robb, Medicated Dusting Powder; Venus, Stella Pomade.
The company also stock perfumes, household appliances and diary products, namely: Dan Duala, Venus Gold, Joy Cologne, Coast milk, Nunu, Olympic, Power Fist, Haier Thermocool and a range of other electronics.
One of its key strengths in Africa is the extensive network of depots and factories in Nigeria.
The financial positions of PZ for the year ended May 31, 2008 revealed that the company’s turnover grew by 22 per cent from N54.21billion in 2007 to N65.94billion in 2008.
Its profit after tax rose to N3.95billion, in the year, from N3.52billion recovered in 2007, representing 12 per cent increase, while its profit before tax item equally grew by 12 per cent from N5.35billion in 2007 to N5.98billion
The company’s shareholders’ funds presently stands at N32.76billion as against N30.56billion in 2007, while it paid a tax of N2.02billion in the year under review as against N1.27 in 2007.
Its five-year financial summary showed that the company’s assets base grew from N21.57billion in 2004 to N36.28 billion in 2008.
The turnover has grown from N27.99billion in 2004 to N65.94billion. The basic earnings per share presently stands at N124 from N0.83 in 2004, N127 in 2005 and 2006, and 138 in 2007.
Shareholders were paid N2.01 per share in the current year, against N1.94 in 2007, while the number of shareholders of the company stands at 79,020, with PZ Cussons Plc, Manchester, United Kingdom having the majority holding of 61.4 per cent of the paid up capital as May 31, 2008.
Its Directors include Professor E.C Edozien, as the largest Nigerian shareholder with 3.88 million shares; Mr. B. Oyelola 441,106 shares; J.O. Akande, 76,435 shares; Mrs O.T. Ifaturoti, 20,226 shares and A.A. Raji 74,410 shares.
Unilever is a multi-national corporation, formed of Anglo-Dutch parentage that owns many of the world’s consumer product brands in foods, beverages, cleaning agents and personal care products. Unilever employs nearly 180,000 people and had a worldwide revenue of almost £40 billion in 2005.
Unilever Nigeria Plc, was incorporated as Lever Brothers (West Africa) Ltd on April 11, 1923 by Lord Leverhulme, but the company’s antecedents have to be traced back to his existing trading interests in Nigeria and West Africa generally, and to the fact that he had since the 19th century been greatly involved with the soap business in Britain.
Unilever Nigeria Plc started as a soap manufacturing company, and it is today one of the oldest surviving manufacturing organisations in Nigeria.
After series of mergers/acquisitions, the company diversified into manufacturing and marketing of foods, non-soapy detergents and personal care products. These mergers/acquisitions brought in Lipton Nigeria Ltd in 1985, and Cheesebrough Ponds Industries Ltd., in 1988. The company changed its name to Unilever Nigeria Plc in 2001.
Unilever Nigeria Plc is a public liability company quoted on the Nigerian Stock Exchange since 1973 with Nigerians currently having 49 per cent of equity holdings.
The company’s principal activity is manufacturing and marketing foods and food ingredients, and home and personal care products. It has manufacturing plants in Aba, Lagos and Agbara. Product brands include Blue Band, Close Up, Key, Knorr, Lipton, Lux, Omo, Pears, Royco and Vaseline.
Unilever PLC in 1994 divested its 40 per cent interest in UAC of Nigeria Plc while the latter became a wholly-owned Nigerian company.
Unilever’s financial report for the year ended December 31, 2007, showed that the turnover grew to N33.99 in the year from N25.55billion in 2006.
The company recorded a loss of N2.01billion in the period under review as against N2.12billion in 2006, while it incurred tax expenses of N716.61million as against N645.87million in 2006.
It paid a dividend of N945.82million as against nil in 2006, representing N0.05 per share to shareholders.
Its parent company, Unilever Overseas Holding B.V, has a majority holding of 1.89 billion shares, representing 50 per cent.
The company’s Directors include Apostle Hayford Alile, former Director General of the NSE, who has 31,250 shares; Egwe N.A Anichebe 65,976; Chief Samuel Adegbite, 227,543; Mr. Felix Ohiwerei, a former MD and Chairman of the company and also former MD and Chairman of Nigerian Breweries Plc.
Thursday, 5 February 2009
DENIALS GALORE
By Yemi Kolapo and Everest Amaefule
Published: Thursday, 5 Feb 2009
The Securities and Exchange Commission has dissociated itself from the comments made by its Executive Commissioner, Legal and Compliance, Mr. Charles Udorah, on behalf of the Director-General, Mr. Musa Al-Faki, calling for a government bail-out for sick banks and firms.
SEC, on Wednesday, declared that statements made by the commissioner, who represented Al-Faki at the Forum of Accountants General of states in Abuja on Monday, did not reflect the position of the commission.
“The management of SEC wishes to state categorically that those statements do not reflect the position of the commission and, therefore, dissociates itself from those views,” it said in a statement signed by the Head, Media, Mr. Lanre Oloyi.
Udorah, who spoke for the DG, had blamed chief executives of certain banks for the crisis in the capital market, saying the time was ripe for the Federal Government to take controlling interest in banks and other companies quoted on the Nigerian Stock Exchange.
He said the take over of controlling shares in unhealthy banks, which were owed N388bn by stockbrokers, should be followed by the injection of fresh hands and the prosecution of “the chief executive officers that had been overcome by greed.”
Meanwhile, the Chartered Institute of Bankers of Nigeria has refuted allegations of misconduct leveled against the banking sector by SEC, saying that the market regulator was incompetent.
In a statement on Wednesday, the institute said, “Chances are that the SEC, under massive pressure from the investing public, has resorted to diversionary tactics to cover up its failure in regulating and managing the stock market. It is time regulators stop fighting themselves and focus on their responsibilities to the investing public.”
According to the statement, signed by the Registrar/Chief Executive, CIBN, Dr. Uju Ogubunka, “The Nigerian stock market is simply drifting rudderless and we now call on the Federal Government to quickly arrest the situation by overhauling the regulatory machineries and consequently, the level of operational efficiency and transparency. Time is running out and the price Nigerians are paying for this regulatory blindfold cannot but be imagined.”
The bankers said the industry might have paid its price for performing its financial intermediation role such of lending. They noted, however, that, weighed against the strength of the capital base of even the smallest bank in Nigeria today, the impact was minimal.
“None of the banks has been found wanting in ethical conduct as far as their stock market activities are concerned, neither has any of them been found guilty by any court of law in this regard,” it added.
Separately, the Minister of State for Finance, Mr. Remi Babalola, on Wednesday, in Abuja, said that the Federal Government was working on several options to restore confidence in the stock market just as he disputed SEC’s claims.
He said, “The truth is that it is only when we have a categorical statement from the banking regulators and from the financial institutions that we can determine the extent of debts in the banking system and that is what I will rely on.
“I cannot rely on a speech SEC gave because I don’t know the basis of that figure, but if for instance, the regulator of the banking system came out to say this is the make up for each of the banks and this is the exposure they have, then we can agree.
“It is not only in the capital market, there is significant exposure in the downstream. There are so many areas that people might have recorded significant downside. What we need to do is to quantify all these and try to see how we can take it out and give them fresh air to continue their business.”
TIGERKENN COMMENTS
Well, let us deny the fact that we were afraid of the banks and getting ready to pull our funds, let us also deny that we were shaken in our resolve to invest more money. It was good news all though. Lets forgive the market and press forward. It all never happened.
Published: Thursday, 5 Feb 2009
The Securities and Exchange Commission has dissociated itself from the comments made by its Executive Commissioner, Legal and Compliance, Mr. Charles Udorah, on behalf of the Director-General, Mr. Musa Al-Faki, calling for a government bail-out for sick banks and firms.
SEC, on Wednesday, declared that statements made by the commissioner, who represented Al-Faki at the Forum of Accountants General of states in Abuja on Monday, did not reflect the position of the commission.
“The management of SEC wishes to state categorically that those statements do not reflect the position of the commission and, therefore, dissociates itself from those views,” it said in a statement signed by the Head, Media, Mr. Lanre Oloyi.
Udorah, who spoke for the DG, had blamed chief executives of certain banks for the crisis in the capital market, saying the time was ripe for the Federal Government to take controlling interest in banks and other companies quoted on the Nigerian Stock Exchange.
He said the take over of controlling shares in unhealthy banks, which were owed N388bn by stockbrokers, should be followed by the injection of fresh hands and the prosecution of “the chief executive officers that had been overcome by greed.”
Meanwhile, the Chartered Institute of Bankers of Nigeria has refuted allegations of misconduct leveled against the banking sector by SEC, saying that the market regulator was incompetent.
In a statement on Wednesday, the institute said, “Chances are that the SEC, under massive pressure from the investing public, has resorted to diversionary tactics to cover up its failure in regulating and managing the stock market. It is time regulators stop fighting themselves and focus on their responsibilities to the investing public.”
According to the statement, signed by the Registrar/Chief Executive, CIBN, Dr. Uju Ogubunka, “The Nigerian stock market is simply drifting rudderless and we now call on the Federal Government to quickly arrest the situation by overhauling the regulatory machineries and consequently, the level of operational efficiency and transparency. Time is running out and the price Nigerians are paying for this regulatory blindfold cannot but be imagined.”
The bankers said the industry might have paid its price for performing its financial intermediation role such of lending. They noted, however, that, weighed against the strength of the capital base of even the smallest bank in Nigeria today, the impact was minimal.
“None of the banks has been found wanting in ethical conduct as far as their stock market activities are concerned, neither has any of them been found guilty by any court of law in this regard,” it added.
Separately, the Minister of State for Finance, Mr. Remi Babalola, on Wednesday, in Abuja, said that the Federal Government was working on several options to restore confidence in the stock market just as he disputed SEC’s claims.
He said, “The truth is that it is only when we have a categorical statement from the banking regulators and from the financial institutions that we can determine the extent of debts in the banking system and that is what I will rely on.
“I cannot rely on a speech SEC gave because I don’t know the basis of that figure, but if for instance, the regulator of the banking system came out to say this is the make up for each of the banks and this is the exposure they have, then we can agree.
“It is not only in the capital market, there is significant exposure in the downstream. There are so many areas that people might have recorded significant downside. What we need to do is to quantify all these and try to see how we can take it out and give them fresh air to continue their business.”
TIGERKENN COMMENTS
Well, let us deny the fact that we were afraid of the banks and getting ready to pull our funds, let us also deny that we were shaken in our resolve to invest more money. It was good news all though. Lets forgive the market and press forward. It all never happened.
Wednesday, 4 February 2009
MINI BULLS
Activities in the NSE have been so poor this year as to tempt some stock traders to abandon stock trading altogether. The low level of liquidity, capital flight and investor apathy unknown before in the capital market has combined to make January one of the worst trading months on the NSE.
There were signs that the market will rebound as early as Friday last week, but the index chalked its first gain on Monday. Gains by highly capitalized stocks like NB, Oando, FBN, etc has pushed the index up for two days now, so where do we go from here. This is the time traders make their worst mistake. Some traders will just wake up now and remember that they have not bought some stocks, invade the market with the hope of making a kill. These investors will buy stocks now after some stocks have gained about 15 %. They then hope and pray that the stock will continue to move up.
I think it is late to buy now if you have short time trades as an objective.
There were signs that the market will rebound as early as Friday last week, but the index chalked its first gain on Monday. Gains by highly capitalized stocks like NB, Oando, FBN, etc has pushed the index up for two days now, so where do we go from here. This is the time traders make their worst mistake. Some traders will just wake up now and remember that they have not bought some stocks, invade the market with the hope of making a kill. These investors will buy stocks now after some stocks have gained about 15 %. They then hope and pray that the stock will continue to move up.
I think it is late to buy now if you have short time trades as an objective.
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