Guaranty Trust Holding Company Plc, Presco Nigeria Plc, Okomu Oil, and BUA Cement Plc, have the best net profit margins among listed companies even amid macroeconomic challenges.
This means that these firms are good at converting profit into revenue, and it also indicates that they are better positioned to deliver higher returns to their shareholders because they have enough profit left after deducting operating expenses and exceptional items.
The chart below shows Guaranty Trust Holding Company or GTCO’s profit margin of 44.69 percent is the best among the most liquid and capitalised firms in Nigeria, according to MoneyCentral calculations.
That is followed by Presco, (41.50 percent); Okomu, (39.56 percent); BUA Cement, (34.17 percent); Zenith Bank, (28.47 percent); Dangote Cement, (25.62 percent); Stanbic IBTC, (22.74 percent) Transcorp, (22.15 percent); United Bank for Africa, (20.98 percent); Lafarge Africa, (19.38 percent), and MTN Nigeria (19.12 percent).
It is glaring that the banks and cement makers dominate the top 10 position, even amid inflationary pressures, currency devaluations, decrepit infrastructure, and tough regulatory environment.
Firms who are quoted on the bourse are relying on price increases in key products to make up for rising input while a rate hike by the central bank has helped lift earnings of banks who had packed their money in fixed income instruments.
The NGXASI Index has returned 15.75 percent so far, driven by impressive corporate earnings, dividend payments, market stimulating corporate actions, and robust system liquidity.
However, the Russia and Ukraine war that has ballooned the price of grains and diesel prices as well as uncertainties surrounding the 2023 elections, flooding in major Agricultural states, and protracted foreign exchange scarcity have cast a pall over future corporate earnings growth.