Investors risk losing 2020 dividends

By Helen Oji

 Nigerian Stock Exchange (NSE)

• As operators grapple with COVID-19 fallouts
• Unilever, Cadbury, Meyer, others suffer loss amid weak spending
• Stop trend to avert job loss, social unrest, experts tell FG

Capital market operators have expressed worry that the prolonged coronavirus pandemic and attendant Foreign Exchange (Forex) illiquidity may cause investors to lose their dividends this year.

The pandemic and the accompanying shutdown of economy have adversely affected operations of many listed firms with multiplier effects on their half year (H1) and nine months results.

Operators urged the Federal Government (FG) to reschedule loan repayment obligations of companies and grant tax holiday to listed firms to ease recovery and avoid erosion of equity investors dividend payout in 2020 and 2021 financial year.

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The COVID-19 crisis has disrupted operations in different sectors of the economy, leading to a fall in demand, sales volume, revenue and underlying profits.

The effect of the lockdown on global and domestic value chain has taken a huge toll on the activities of quoted companies on the Nigeria Stock Exchange (NSE).

The pandemic has disrupted major macroeconomic policies across the globe, leading to huge import levies, exchange rate volatility and haulage costs of imported raw materials in the manufacturing sector.

WITH prevailing foreign exchange instability and logistics and regulatory rigidities in importing raw materials, the margins of these companies were affected directly, as the hike in input prices suppressed their half-year profitability.

The operators urged government to roll out palliatives in form of short-term grants, payable within three to five years for sectors mostly affected to enable them boost their working capital, expand business operations and sustain current rally in stock market.

According to them, failure to adopt these measures would result in massive job loss, social unrest and high level of poverty.

They also stated that poor earning might extend to 2021 full year performance and dividend payout to the detriment of investors.

A look at the performance of quoted companies for the half year ended June 30, 2020 showed that banks reported a profit after tax of N415.5 billion, representing five per cent decline compared to N436.9 billion achieved in 2019.

For Fast Moving Consumer Goods (FMCG), the rising middle-income class and steady economic growth positions Nigeria as an attractive investment destination for FMCG players globally.