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Nigerian Breweries down as Cadbury slides further

Category: Daily & Weekly Market Updates

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Nigerian Breweries down as Cadbury slides further

march 17, 2005 03:34:39/BusinessDay



Nigerian Breweries Plc the highest capitalized company quoted on the Nigerian Stock Exchange (NSE) suffered a one year price depreciation.

A performance study indicates that February 23, 2004 it traded N81.02 per share and closed, at N38.85 per share February 21, 2005, shedding a whopping N42.17 per share.

An analysis of the company’s market ratios showed that the stock attained a high of N129 per share last year and low of N63.2 per share.

One year high means the highest price level recorded in the year while the year low indicates its lowest closing price.

In contrast, in the first 2 months of this year, its highest closing price was N42.8 per share with low of N32.65.

From the stock exchange daily official lists for the two periods, NB’s dividend dropped to N1.1 from N2.1 paid from earnings of N0.65 and N1.95 per share respective.

Following from these, price earning ratio which measures the length of time it would take investors to recover their initial investment outlay increased from 60.57 to 62.851.

NB’s fate could be attributed to the 1 for 1 bonus it paid to shareholders during the last financial year and the huge capital it invested in the Ama Breweries Enugu. What this means is that speculators who make fortune from capital appreciation may have to forget NB for now and leave it for long term investors who are ready to wait to reap from the investment for the future which NB has embarked upon. Such investors stand a good chance of receiving dividend and bonus.

NB’s major competitor Guinness was not spared the price slump ordeal as it went down N14.44 per share for the year closing N114.43 February 23, 2004 and N99.99 per share February 21, 2005. Guinness recorded 2004 high of N137.71 per share and low of N84.00. As at February 2005, its highest price has been N116.99 with low of N99.1.

According to the daily official list, Guinness improved its earnings from N6.12 per share in 2004 to N6.35 per share as at February. From these it paid dividend of N6.35 per share, up from N4.74 per share in 2004.

The impressive earnings and dividend record pushed down its P.E ratio showing investors shorter recovery period.

The poor price showing by the two major brewing companies may be a confirmation that consumers may be spending less on beer. During the last Christmas celebration, brewers complained of low sales compared to previous years.

Another major company Nestle, lost N27.77 per share in one year trading at N172.47 February, 23, 2004 and N148, February 11, 2005. Its 2004 highest closing price was N190.02 per share with N124 low.

Two months into 2005, it recorded 150.45 high and N143 low.

Another food/beverages giant Cadbury recorded a one year N30.75 slide from N87.15 to N56.4. In 2004 its highest closing price was N101.0 with a low of N64.75. This year up to February to the its highest price has been N60.5 with low of N55.95 per share.

The shedding of weight by market leaders may further be attributed tight liquidity in the economy. Operation believe with the approval of the 2005 budget by the National Assembly more money will be released into the economy both for capital expenditure and payment of debt to contractors resulting in increased stock investment.

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