Economy
Investors Advised to Hold PZ Cussons Shares
By Modupe Gbadeyanka
Recently, one of the companies trading its securities on the floor of the Nigerian Stock Exchange (NSE), PZ Cussons Nigeria Plc, released its financial statements for first quarter of 2019 and the firm posted a loss of N204.6 million versus the N123.1 million loss recorded in Q1-18.
Not too many investors were happy with their performance, which was sadly disappointing.
But analysts at Cordros Research have said investors having shares of the company in their portfolio can still keep them because PZ Cussons’ “revenue performance will be better over the remaining quarters.”
However, in a report released last week, Cordros Research said compared with 2018, it expects the group’s earnings in Q2, and indeed the rest of 2019E, to be weaker, with the trading update also released last week by the parent company guiding to still challenged conditions in Nigeria ahead of the general elections.
“We recently spoke to some PZ’s distributors in Lagos and they confirmed to us that the ‘market has been subdued since June across all segments,’ with new HPC launches gaining only little traction,” the report said.
At -14% y/y and -8% q/q in Q1-19, PZ Cussons’ revenue has declined y/y and q/q for the third quarter in a row. June-August is off-peak period for the group, and management had in June, guided to continued difficult trading conditions in the local market.
“We had expected revenue will decline by low single-digit over the low base of Q4-18, and given new products had just been introduced to the market.
“While revenue performance will be better over the remaining quarters, in the historical pattern, following the last result, we believe upside is limited compared with 2018FY, against a backdrop of still subdued consumer spending (reinforced by the September trading update),” the report stated.
Higher like-for-like (LFL) gross margin in Q1-19 driven by lower FX loss:
At 24.3%, reported LFL gross margin was higher by 167bps vs. Q1-18. The gross margin is consistent with our expectation, and also an improvement over the last two quarters of 2018FY. We believe the lower FX loss of N670 million (-63% vs. Q1-18 and -68% vs. Q4-18) was supportive of the improved gross margin, but while FX – and broadly, gross margin – outlook is positive, risk is that PZ’s FX loss is somewhat unstable and pricing pressure persists (we learnt from distributors that the prices of Joy and Imperial Leather bar soaps were recently returned to their pre-hike levels).
Sticky opex and lower revenue squeeze EBIT:
Despite lower revenue, opex grew by 0.2% y/y and 11% q/q, with the corresponding ratio to revenue at a record-high of 26%. On LFL basis, we estimate that PZ recorded operating loss of N250 million (Q1-2018: N90 million) in the review period. While the focus for PZ must be on maintaining cost control, we are afraid that increasing competition will force the group to retain opex around current level (N4 billion average quarterly spend since Q1-18) to maintain market share across product segments. On our forecast 2% decline in revenue, we reduce our 2019E EBIT margin estimate to 3.5% (previously 4.1%).
Changes to earnings estimates and TP:
Our adjusted PBT estimate is N2.4 billion in 2019E, (previously N3.2 billion), equating to 4% growth vs. 2018FY. Save for materially lower opex and finance costs compared to our estimates, we see no catalysts for PZ’s earnings in the near term.
On our revised TP of N12.18/s (previously N14.60/s), the stock trades at 3% downside, and expected total return of -1% after incorporating 2019E dividend yield of c.2%. HOLD.
**Tinubu Says Economy on Steady Growth
By Modupe Gbadeyanka
President Bola Tinubu has been praised for the ongoing financial and fiscal reforms in the country and encouraged to pursue a stronger partnership that supports investments, youth training, and employment.
The chief executive of Deloitte Africa, Ms Ruwayda Redfearn, who led a delegation to visit Mr Tinubu in Abuja on Wednesday, said the global organisation is primarily focused on digital and business transformation, with over 500,000 employees worldwide working across various roles and locations, including over 6,000 in Africa, adding that her accountancy firm’s revenue was $74 billion in 2025.
“We are here before you to say that we want to serve. We have a local team on the ground that is ready, as well as the global firm, to support you and support your administration as you lead the country,” she said.
Also, the chief executive of Deloitte West Africa, Mr Yomi Olugbenro, assured President Tinubu of the firm’s support for the reforms.
“We do what we do because of the philosophy that our African CEOs talk about – making an impact that matters. Where we are at the moment, we believe that the ground has been solidly laid. There is a need to truly extract more value and deliver the dividends of democracy to ordinary Nigerians on the street. The bigger work is really about how to cascade some of those big reforms further down.
“We do believe that with the capabilities that the firm has all over the world, with the half a million people that our CEO spoke about, we have use cases, examples, and experiences of how we supported nations all around the world, so Nigeria will definitely benefit from those experiences.
“So, that is why we are here, and we welcome the invitation that you may grant us as to where exactly you want us to support you,” he stated.
In his remarks, Mr Tinubu informed his guests that his administration’s reforms have steadily stabilised the economy over three years, with growing plaudits for positive development and growth indicators.
“We are following the example of Deloitte’s greatness to change things from the foundation, building the necessary future for our people.
“Yes, reforms are difficult. It has not been a McDonald’s customer relationship but a harvester of good things, if implemented well, and that is what we are about.
“Thank you for your partnership in paying attention to what we are doing here, as we have heard from the Minister of Finance about the fiscal, revenue and tax reforms that have taken place and are moving the nation forward.
“The reforms on revenue will continue to stimulate growth. And the effect of the reform? Yes, some issues are difficult to take the bitter medicine, but it is working well. For the economy, Nigeria is making serious foundational progress,” he stated.
The President said the reforms had stimulated the economy, strengthened the fiscal and revenue sectors, repositioned financial institutions, and prepared the country to be more globally relevant and competitive, urging Deloitte Africa to improve its impact on the Nigerian economy by training and recruiting the dynamic youth population.
“The family of Deloitte; you just reminded me of my cradle years in accountancy and where I cut my childhood accounting teeth in Chicago. Deloitte has a good training programme, and I believe you will continue to reflect that,” he added.
By Adedapo Adesanya
Oil prices fell on Wednesday after the United States’ attacks against Iranian military installations that aimed to limit its ability to strike shipping in the Strait of Hormuz.
Brent futures declined by $1.11 or 1.31 per cent to $83.62 a barrel, while the US West Texas Intermediate (WTI) futures lost 81 cents or 1.02 per cent to close at $78.53 a barrel.
Attacks worsened a supply disruption in the Strait of Hormuz, through which about a fifth of the world’s oil and liquefied natural gas passed prior to the war’s outbreak.
The US military said it had hit dozens of military targets near the strategic waterway and Iranian coastal areas in strikes lasting seven hours. In response, Iran’s Islamic Revolutionary Guard Corps (IRGC) said on Wednesday it had struck American military targets in the region, including in Bahrain, Kuwait and Jordan.
The US military said its fresh strikes on Wednesday against Iran’s coastal defence systems and cruise missile storage and launch sites were “designed to further degrade military capabilities Iranian forces have used to attack commercial shipping in the Strait of Hormuz.”
The US alleged that said Iran had “intentionally” targeted civilians and attacked seven commercial vessels over the previous week, leaving roughly a dozen crew members dead, missing or injured.
The hostilities between Iran and the US reignited last week, breaking an already fragile truce reached in June after several months of fighting. The collapsed ceasefire precipitated a new crisis in the waterway, and Iran threatened to close all other export corridors that benefit the US and its allies.
The US Energy Information Administration reported a 1.7 million-barrel drop in US crude inventory last week. The American Petroleum Institute (API) had estimated that crude oil inventories in the US fell by 564,000 barrels in the week ending July 10.
Goldman Sachs estimated in a note that Gulf exports recovered to more than 80 per cent of pre-war levels after the US-Iran memorandum of understanding in June but slipped back below 50 per cent, or about 11 million barrels per day, over the last week.
The bank said Brent could exceed $110 in the fourth quarter this year if the Gulf export recovery continues to stall.
By Adedapo Adesanya
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will, at the Commercial Bid Conference, announce the successful bidders for 50 oil and gas blocks in the 2025 Licensing Round on July 21, 2026.
The regulator said the conference would conclude an eight-month licence round that began on December 1, 2025, after President Bola Tinubu approved the exercise under the Petroleum Industry Act (PIA) 2021.
The commission said the 50 blocks include 15 onshore, 19 shallow-water, 15 frontier and one deep-offshore block, covering basins such as the Niger Delta, Chad Basin, Benue Trough, Anambra and Bida.
It said the round aims to attract about $10 billion in fresh investment and to unlock discovered but undeveloped fields, fallow assets and gas resources. NUPRC described the 2025 round as the third licensing exercise under the PIA framework and stressed it is designed to prioritise natural gas development.
NUPRC outlined a five-stage process for the round — registration and pre-qualification, data acquisition, technical bid submission and evaluation, and the commercial bid conference — followed by ministerial approval and contracting. The Commission said it notified pre-qualified applicants on March 16, 2026, and closed technical and commercial bids on June 12, 2026.
NUPRC chief executive, Mrs Oritsemeyiwa Eyesan, had said the selection would be merit-based and would exclude weaker applicants.
She said only candidates with strong technical and financial credentials, professionalism and credible development plans would advance, and that winners would be chosen on a weighted combination of technical and commercial scores.
To widen participation, the federal government fixed signature bonuses for the round in a prescribed range of $3 million to $7 million per block, the Commission said, adding that bids outside that range would be non-compliant and excluded.
NUPRC said it would resolve the tied highest bids within the range by conducting a sealed rebid for the signature bonus, adding that successful bidders will receive Petroleum Prospecting Licences (PPLs) and may elect either a Concession or a Production Sharing Contract (PSC) framework, noting that the choice of framework will determine fiscal terms for up to two decades.
The agency noted that bidders were required to present host community development plans and to commit to remit 3 per cent of operating expenditure to Host Community Development Trusts. It said decarbonisation objectives and broader environmental, social and governance (ESG) requirements were mandatory parts of submissions.
It warned that applicants with government debts, those that had previously failed to develop licences “vigorously and in a business-like manner,” or those found non-compliant with applicable laws could be disqualified at any stage.
The regulator said it expects ministerial approval and formal contracting between July and October 2026, after which awardees must execute concession contracts before licences take legal effect.
Recall that during the 25th Nigeria Oil and Gas (NOG) Energy Week in Abuja, the NUPRC issued PPLs to 12 companies across 19 blocks from the 2024 round. The Commission named recipients, including Boron Energy Limited, Energy Marketing and Supply Limited, Sahara Deepwater Resources Limited, Tulkan Energy E&P Company Limited and said that the exercise showed the licensing pipeline was functioning.
