No respite yet for stock market investors as no fewer than 15 listed firms across sectors so far have failed to pay dividends to shareholders in the 2023 financial year as these firms battle with perennial issues bedeviling the nation’s economy.
Retail investors still grappling with years of downturn and asset losses in the stock market are faced with severe hardship due to non-payment of dividends, a major source of their livelihood as the nation’s economic woes have wiped out shareholders’ funds in these firms and hampered their ability to pay dividends.
These firms are MTN Nigeria, Nigerian Breweries, Dangote Sugar Refinery, Nestle, Chams, Japaul Gold, and NCR. Others are UPDC, Notore Chemical, PZ Cussons, International Breweries and Livestock Feeds.
In the 2022 financial year, four out of the 15 companies declared a combined total dividend of close to N400 billion to shareholders. For instance, MTN Nigeria paid a total of N317.5 billion in dividends, culminating in N5.60 kobo while Dangote Sugar declared N18.32 billion in dividends translating to N1.50 kobo per share within the period.
Shareholders of Nestle received N46.75 billion total dividend, translating to N61.50 kobo. Nigerian Breweries declared N13.87 billion dividend, amounting to N1.43 kobo within the period.
However, the harsh economic reality has severely impacted their performance, causing them to post huge losses in their 2023 operations. For some of the companies, the losses were majorly due to foreign exchange loans they took from their parent companies or international sources while others were overwhelmed with the prolonged uncertainty in the nation’s business environment.
Unfortunately, a good number of shareholders have invested huge amounts of money, even their life savings in these firms due to their track records of good corporate governance and dividend policy.
Although some analysts argued that while it may be disappointing to investors seeking short-term returns, it could also mean prudent financial management and strategic planning by these companies, potentially leading to increased investment in innovation, expansion, or sustainability initiatives, which, in the long run, could ultimately benefit the economy.
However shareholders insisted that the losses have caused excruciating pain to them as it has further reduced their purchasing power and exposed them to more hardship.
In addition, the shareholders expressed doubt about the sustainability of their investment in these firms and the continuity of some of the companies in the Nigerian market.
A Research Analyst at Cowry Asset Management Limited, Charles Abuede said the decision by listed corporates not to pay dividends to shareholders in the 2023 financial year may be hinged on various factors such as financial constraints, reinvestment opportunities for future growth, or strategic shifts in business priorities.
He pointed out that the trend may indicate caution for the market in the face of economic uncertainty, which has compelled many listed firms to preserve cash reserves and focus on long-term growth strategies rather than short-term returns for shareholders.
Abuede added that the trend could also impact the confidence of investors and consumer spending, especially for shareholders who rely on dividends as a source of income.
Co-founder of Noble Shareholders Association of Nigeria, Gbadebo Olatokunbo said there is a need for government to review its policies on local sourcing and backward integration.
According to him, many indigenous firms that have been in operation for over 50 years still source 80 per cent of their raw materials outside the country.
“Findings have indicated that many companies that were about 50 years in Nigeria still rely on foreign raw materials, which is not good for our economy. We implore MAN to start talking to their members on the importance of backward integration and demerits of over-dependence on foreign materials.”
A look at the 2023 financial performance of these quoted companies showed that PZ Cussons, for the year ended November 2023, recorded a loss after-tax of N74.1 billion from a profit of N7.7 billion achieved in the corresponding period in the same period in 2022.
Similarly, Fertiliser and agro-allied company, Notore Chemical Industries posted a group loss after tax (LAT) of N114.2 billion for the year ended December 31, 2023, against a loss of N7.1 billion posted in the previous year.
This is even as the company’s revenue decreased to N21.55 billion from N32.3 billion in 2022 financial year. For International Breweries Plc, its 2023 result showed N70.03 billion loss from N21.63 billion loss declared in 2022.
The brewery company also announced N97.27 billion loss before tax in 2023 financial year from N266.84 billion loss before tax reported in 2022. The brewery company losses are on the backdrop of N55.98 billion net foreign exchange loss incurred in 2023 up from N5.11 billion net foreign exchange losses suffered in 2022.
In the same vein, Nestle recorded a loss before tax of N104 billion in its 2023 financial year, against profit before tax of N71 billion posted in the corresponding period in 2022.
The firm incurred a foreign exchange loss of N195 billion which was the major reason for the loss position. In addition, MTN recorded a loss after tax of N137 billion. The company said the loss has resulted in the depletion of its retained earnings and shareholders fund to negative N208.0 billion and N40.8 billion respectively.
