Despite economic disruptions caused by the Russia-Ukraine conflict and the aftermath of the COVID-19 pandemic, MTN Nigeria Communications Plc, Dangote Cement Plc, and three other companies have earned their places in the listed companies’ trillion-naira revenue club.
2022 was a tough hurdle for companies in Africa’s biggest economy; a spike in diesel prices since the start of the year, combined with foreign exchange scarcity and high input costs due to a war in East Europe, forced some firms to close shop while the existing ones are struggling to stay afloat.
Yet, findings showed some firms are defying odds by tightening their belts, applying cost optimisation strategies and innovative solutions to navigate Nigeria’s weak macroeconomic environment.
BusinessDay analysis on the company results of the top 30 companies on the Nigerian Exchange Limited (NGX), popularly known as the ‘NGX30’, revealed MTN Nigeria, Dangote Cement, Access Holdings Plc, Flour Mills of Nigeria Plc, and Ecobank Transnational Incorporated are the only companies that crossed the trillion-naira revenue threshold in 2022.
Aggregate revenue reported by these firms grew by 24.72 percent to N7.21 trillion in 2022 from N5.78 trillion in 2021.
Company analysis
Access Holdings
Access Holdings is the newest entrant in Nigeria’s trillion-naira revenue club; the company reported a 43 percent rise in 2022 gross earnings to N1.39 trillion from N971.89 billion in 2021, on the back of a 528.19 percent increase in net gains on investment securities.
With gains from fixed-income securities surging by 7,917 percent, net gains on financial instruments at fair value grew to N281 billion in 2022 from N44.78 billion in 2021.
The tier-one bank also reported a 37.53 percent increase in interest income to N827.47 billion in 2022 from N601.65 billion in 2021. Interest income grew on the back of a 22.6 percent growth in interest income on net loans to customers and 64 percent increase in interest income on investment securities.
Fee and commission income also grew by 24.33 percent to N197.59 billion in 2022 from N159.92 billion in 2021, following a 108.7 percent boost in credit-related fees and commission, 27.6 percent increase in commission on bills and letters of credit, and 15 percent increase in account maintenance charge and handling commission.
MTN Nigeria
MTN Nigeria’s revenue hit a five-year high in 2022, reporting a 21.82 percent increase in total revenue to N2.01 trillion from N1.65 trillion in 2021, on the back of an increase in service revenue.
“Our strong commercial momentum, supported by an accelerated investment in our network, enabled growth across all revenue lines. As a result,” Karl Toriola, CEO of MTN Nigeria, said in their latest earnings report.
“Our ability to maintain service revenue growth while unlocking efficiencies through disciplined execution of our expense efficiency programme led to a 22.0 percent growth in EBITDA and a 0.2pp expansion in EBITDA margin to 53.2 percent, in line with our medium-term target range,” Toriola said.
Service revenue grew by 21.5 percent to N2.01 trillion due to a 64 percent increase in digital revenue, and 46.9 percent increase in data revenue.
MTN Nigeria said: “Data revenue rose on the sustained growth of our active data users and increased data usage. This was supported by our 4G network expansion drive and enhanced quality and capacity of the network to support the rising data traffic. Our 4G network now covers 79.1 percent of the population, up from 70.3 percent in December 2021.”
“Data traffic rose by 66.6 percent, of which 79.5 percent was carried on the 4G network. Usage (MB per user) grew by 47.4 percent. In addition, we added over 5.5 million new smartphones to our network in 2022, bringing smartphone penetration to 52.4 percent.”
The telecommunications company said its digital revenue grew as the adoption of its digital products continued to grow with user journey optimisation and the growth of the active base, up 37.5 percent to 10.3 million.
“Rich media services, mobile advertising and content VAS, continue to drive revenue growth. Our instant messaging platform, ayoba, accounted for half of our active users,” MTN said.
Dangote Cement
Nigeria’s largest cement maker, Dangote Cement, saw its revenue increase by 17.39 percent in 2022 to N1.62 trillion from N1.38 trillion in 2021.
“Group revenues increased largely due to better price realisation to offset rising costs”, the cement maker said in a note seen by BusinessDay.
Volumes declined by 5.1 percent to 27.67Mt in 2022 from 29.27Mt in 2021, while the price per tonne rose by 23.30 percent to N58,282 in 2022 from N47,270 in 2021.
“The lower volume, elevated by the high base of 2021, was due to inflation and energy supply disruptions, and Pan-Africa volumes down owing to extended plant maintenance in Senegal and Congo and volatility in cement/clinker landing costs in Cameroon, Ghana and Sierra-Leone,” the company said.
Flour Mills Nigeria
FMN’s revenue hit its highest in eight years, amounting to N1.11 trillion in the nine-month period of 2023 (9M’2023) 35 percent higher than N825 billion reported in the corresponding period of 2022.
“Flour Mills of Nigeria Plc in 9M’2023 achieved over a trillion naira (N1.114 trillion) revenue for the first time, demonstrating sustained momentum across all business segments compared to the previous year (N825 billion),” the company said.
Total revenue reported grew on the back of an increase across reportable segments of the company, with the food revenue generating segment accounting for 65 percent of the firm’s total revenue.
It grew by 35.5 percent to N724 billion in 9M’2023 from N534 billion in 9M’2022, primarily due to “continued focus on retail expansion and proactive pricing to cushion steep input costs,” according to the FMN.
Driven by robust performance across its categories, it also reported a 38.88 percent increase in its agro-allied revenue-generating segment amounting to N218 billion in 9M’2023 from N157 billion in 9M’2022.
The company said in a statement: “The fertiliser business recorded a 64 percent growth in revenues and 82 percent profit growth driven by the commissioning of a new fertilizer blending plant in May 2022. The oils and fat business grew by 54 percent driven by increased volumes due to intensified milling activities while the animal feeds business reported 20 percent topline growth owing to increased product availability.
“Golden Sugar recorded an impressive 34 percent revenue growth; this was achieved due to increased volumes, various customer engagement, and popularity of our locally produced brown sugar.”
Ecobank Transnational Incorporated
The gross earnings reported by Ecobank grew by 12.97 percent to N1.08 trillion in 2022 from N956 billion in 2021.
Interest income grew by 14 percent to N690 billion in 2022 from N603 billion in 2021, while fees and commission income grew by 11 percent to N227.8 billion in 2022 from N205 billion in 2021.
The bank also generated income from revenue trading amounting to N133 billion in 2022, 10 percent up from N121 billion in 2021, and net investment income of N5.65 billion in 2022.
“Net revenue rose 6 percent or 26 percent in constant currency to $1.9 billion, reflecting diversification benefits, growth momentum, and efficiency gains, which led to solid growth in net interest income and non-interest revenue. Payments revenues grew $25 million or 12 percent to $234 million (representing 13 percent of Group net revenues), driven by merchant acquiring, cards, and wholesale payments. Record cost-to-income ratio of 56.4 percent benefited from solid revenue growth and disciplined cost management in an inflationary environment,” Ecobank said in an earnings release statement. (BusinessDay)
