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Economic uncertainties inhibit National Salt of Nigeria growth prospects

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Analysts have identified economic uncertainties as a major reason inhibiting the growth prospect of National Salt Co. Nigeria plc, as first quarter profits slumped 19.43 percent.

For the first three months of 2014, the company’s revenue dipped by 6.5 percent to N2.69 billion from N2.78 billion as of Q1 2013, while pre-tax profits slumped by 19.4 percent to N813.37 million.

The slowed growth in the company’s performance could be attributable to the naira volatility as they import most of their raw material, according to Abiola Rasaq of the Research and Strategy Unit of Associated Discount House Limited, in an emailed statement to BusinessDay.

“This explains the high cost of production in the first quarter results of the company. Also, some other competitors are also coming on board or entering into the market thereby intensifying competition and thus diluting the company’s monopoly,” he said.

Based on BusinessDay investigation, the importation of the product is exacerbating the position of the company, and also impacting on local production.

An analyst, who craved anonymity, told BusinessDay that the political unrest or insecurity in the Northern part of the country caused by the Boko Haram insurgents was majorly responsible for the dwindling performance of National Salt as it generated 40 percent of its revenue from the North.

The Boko Haram sect has been pushing violently for Islamic rule in Africa’s largest economy Nigeria, a campaign that has claimed at least 2000 lives, according to Amnesty International.

National Salts controls up to 65 percent of the market but faces stiff competition that could reduce its dominance.

Data from Report Linker, an online market research firm, show that the global salt demand would climb 2.9 percent annually through 2015 to 327 million metric tons, valued at $13.6 billion.

The company’s share price closed at trading at N12.50 on the floor of the Exchange, while market capitalisation was N33.11 billion.



Article Credit: Businessdayonline

Updated 5 Years ago

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