Nigeria's public companies post impressive returns in H1 2023

AFRICAN STOCKS AND FINANCEOctober 9, 2023 at 12:05 PM UTC

In the first half of 2023, Nigeria-listed companies have posted significantly better returns for their shareholders compared to the same period in 2022. Data from financial statements of over 35 listed companies analyzed by Nairametrics across various sectors, including financial services, manufacturing, telecoms, and consumer goods, revealed a higher return on equity (ROE).

The companies collectively reported profits totaling N2.146 trillion during the first half of the year, with a total average of N12.1 trillion in shareholder funds. This resulted in an average ROE of 23.3%, compared to 17.24% in the same period in 2022. This improvement in ROE reflects better financial performance and profitability for these listed companies in Nigeria during the first half of 2023.

That is despite recent policy shifts and macroeconomic challenges. The equity market has responded positively to these developments, with the NGX All-Share Index (NGXASI) recording an impressive return of 29.52% as of the end of September 2023. This suggests that investors have reacted favorably to the improved financial performance and prospects of Nigerian listed companies, driving up the overall market index.

Key Takeaways

Return on Equity (ROE) is a crucial metric for investors as it helps distinguish profit-generating companies from those that burn through profits. Calculated by dividing net income by shareholders' equity, ROE provides insights into how effectively a company utilizes its equity to generate profits. High ROE is often seen as a sign of effective management, indicating that the company efficiently deploys its equity to generate profits. This can make the company more appealing to investors, potentially driving up demand for its shares and increasing its stock price. In H1 2023, several Nigerian listed companies have demonstrated their ability to generate substantial profits from shareholders' equity, with ROE figures exceeding 20%. Notable examples include GTCO, UBA, Zenith Bank, Okomu Oil, and MTN Nigeria, among others.