Economy
Nestle Nigeria’s Marketing Cost too High—Shareholders
**Demand Bonus Shares
By Modupe Gbadeyanka
Shareholders of Nestle Nigeria Plc have expressed concerns over the huge amount used by the company for its marketing and distribution of goods across the country.
The shareholders advised the management to look for creative ways to carry these functions with lesser amount of money.
In the 2018 financial year, Nestle Nigeria said it spent N43.4 billion for its marketing and distribution, which the shareholders said was too high.
They urged the company, one of the largest food and beverage companies in Africa, to decentralise its operations so as to save cost.
However, National Coordinator of Progressive Shareholders Association of Nigeria (PSAN), Mr Boniface Okezie, who spoke at the firm’s Annual General Meeting (AGM) on Tuesday in Lagos, praised the board and management for ensuring steady and enhanced dividend payment over the years.
He said shareholders would appreciate the issuing of bonus shares to the investors going forward, urging the board to give this a thought.
Addressing shareholders at the meeting, Chairman of Nestle Nigeria, Mr David Ifezulike, going forward, “We will continue to leverage our research and development capacities to delight our consumers while creating value for our business and everyone across our value chain.”
He added that, “We are confident in the capacity of our people, our dedication to deliver high quality, tasty nutrition choices to our consumers and the continuous support of our stakeholders, we look towards 2019 with cautious optimism.”
Commenting on the company’s performance in 2018, Mr Ifezulike said the 2018 financial year was occasioned by unpredictable changes in the business environment, noting that the influx of competing products presented both a challenge and an opportunity for innovation to continue to delight consumers.
According to him, economic activity remained relatively weak in the fourth quarter of 2018, after the slight increase in activities in the third quarter due to higher oil production.
“On the average, spending power further decreased due to the elevated inflationary pressures as we witnessed more value driven consumption decisions,” he said, adding that despite the harsh operating environment, revenue increased by nine per cent while profit after tax rose 28 percent.
He added that in line with the policy of making shareholders the ultimate beneficiaries of the company’s business growth, the board recommended a final dividend of N30.517 billion or N38.50 per ordinary share.
“As in the past years, Nestle Nigeria brands remained leaders in their categories even with the influx of competitive brands in the market,” noting that marketing initiatives focused on creating nutrition awareness for its consumers who trust the brand’s ability to deliver high quality nutritious products.
He added that the extension of single serve pack formats has helped Nestle to drive penetration of its brands, even as it invested in expansion of its routes to market, working with a motivated and dedicated distribution network.
By Adedapo Adesanya
The Naira closed flat against the United States Dollar at N1,370.19/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, July 3.
However, it appreciated against the Pound Sterling in the same market segment by N2.29 to settle at N1,829.88/£1 compared with the previous day’s N1,832.17/£1, and marginally depreciated against the Euro by 4 Kobo to close at N1,568.32/€1 versus Thursday’s closing price of N1,568.28/€1.
At the parallel market, the Naira also traded flat against the US Dollar at N1,390/$1, and at the GTBank forex desk, it also maintained stability at N1,832/$1.
Market conditions improved shortly after the following minimal intervention by the Central Bank of Nigeria (CBN) through modest Dollar sales, which boosted liquidity and supported stronger trading activity.
Easing pressure came after half-year profit-taking tapered down, while continued stronger policy signals from the central bank add to near-term support.
Deals executed at the official market on Friday came in at $70.430 million across 82 interbank deals, from $85.517 million the previous day.
Meanwhile, the cryptocurrency market continued its recovery after June non-farm payrolls printed at 57,000, less than half the 113,000 consensus, sending the implied probability of a September Federal Reserve rate hike from 64 per cent to 54 per cent and dragging AI stocks sharply lower.
Weak labour data reduces inflationary pressure and, by extension, the Federal Reserve’s justification for holding rates elevated. That transmission mechanism is direct: lower rate-hike odds compress the opportunity cost of holding non-yielding assets like crypto.
Bitcoin regained the $62,000 mark after it rose by 1.3 per cent to $62,475.29.
Cardano (ADA) gained 6.6 per cent to trade at $0.1759, Ripple (XRP) appreciated by 3.5 per cent to $1.14, Ethereum (ETH) expanded by 2.4 per cent to $1,756.82, Dogecoin (DOGE) improved by 2.1 per cent to $0.0768, Solana (SOL) chalked up 1.8 per cent to $82.65, TRON (TRX) increased by 1.5 per cent to $0.3235, and Binance Coin (BNB) soared by 1.4 per cent to $569.12, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.
By Adedapo Adesanya
Oil prices rose minimally on Friday, as traders held on to hopes for a successful outcome from attempts to secure peace between the United States and Iran.
Brent futures were up 14 cents or 0.19 per cent to $71.94 a barrel, and the US West Texas Intermediate (WTI) grew by 9 cents or 0.13 per cent to $68.78 a barrel.
Trading was light as US markets were closed ahead of the country’s Independence Day holiday on Saturday. On Thursday, the two oil benchmarks hit their lowest levels since before the US-Israeli war with Iran began in late February.
Analysts noted that investor hopes for a full reopening of the Strait of Hormuz are being buoyed by peace talks between the US and Iran. The dealmaking process remains fragile but continues for now, as the question of the Strait of Hormuz tolls and administration remains contentious.
Citi Bank noted that there are expectations that the memorandum of understanding (MoU) will hold, not because trust has suddenly emerged, but because the incentives to break are poor for both sides.
China’s crude buying remains weak; physical prices have crumbled due to the surge of prompt supply from the Middle East, while inventories have drawn far less than expected.
Some shipping has resumed through the Strait of Hormuz, as called for under the initial US-Iranian deal, but uncertainty is high after the two countries exchanged strikes last weekend following an Iranian attack on a cargo ship.
With the prospect of shipping more oil, Gulf producers are working to increase output. Kuwait’s oil production rose sharply to 1.65 million barrels per day in June, from 580,000barrels per day in May while at least five supertankers carrying a total of 10 million barrels of Saudi oil have left the strait and Saudi Aramco has switched to spot pricing from longer-term contracts to speed sales in Asia.
According to Reuters’ monthly survey, the 11 members of the Organisation of the Petroleum Exporting Countries (OPEC) produced 19.43 million barrels per day in June, up 3.3 million barrels per day from May, when output plunged to the lowest level recorded by the survey since at least 2000.
Saudi Arabia and Iraq also boosted output, while Nigeria and Libya posted smaller increases despite avoiding the worst of the Gulf disruptions.
By Adedapo Adesanya
The seven-member subgroup of oil producers under the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) is set to extend a series of output quota hikes by 188,000 barrels per day when they meet on Sunday, July 5.
The small group launched the hikes after the US and Israeli forces struck Iran in late February, setting off the latest war in the Middle East.
According to Reuters, the OPEC+ subgroup, including Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman, will likely decide to boost their production quotas for August by another 188,000 barrels daily, after last month agreeing a same-size production boost for July, which, unlike the previous hikes, may actually take place.
OPEC+ has been hiking production almost since the war began, but these hikes have remained on paper as production in the Persian Gulf remained paralysed by the hostilities and Iran’s decision to close the Strait of Hormuz.
This decision forced Gulf producers to stock up after shutting in wells. Iraq was especially hard hit by the Hormuz shutdown, with its production dropping from over 4 million barrels daily to less than 2 million barrels daily while the United Arab Emirates (UAE) started shipping record volumes of crude abroad, right after it quit OPEC.
After six decades as a member, the Emirates decided to reduce the group members to 11 after it pulled out, sparking predictions that they would immediately start boosting production, but for now, the country is only boosting exports.
The Iran war has led to a sharp drop in production among key members, with OPEC+ output dropping to 33.13 million barrels per day in May, according to OPEC data, from 42.77 million barrels per day in February.
Still, oil prices have returned to pre-war levels, pressured by weaker Chinese imports, higher exports from non-Middle East producers, a record strategic stock release coordinated by the International Energy Agency (UAE) and the US-Iran memorandum of understanding to end the war that helped ease supply concerns.
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