'How industrial sector capitalisation rose to N4trn in 8 months'

The value of companies listed under the Industrial Goods sector of the Nigerian Stock Exchange (NSE) rose to N4 trillion in eight months.

Industrial Goods sector comprises companies primarily involved in the manufacturing and distribution of capital goods, including aerospace and defence, engineering and building products, electrical equipment, industrial machinery, and packaging products for industrial and consumer products. Their businesses are dominated by the production of goods for commercial use.

Companies in this sector are either listed on the mainboard or premium board. On the premium board, Dangote Cement and Lafarge Africa are listed there, while Notore Chemical Industries, Berger Paints Nigeria, BUA Cement, Chemical and Allied Products (CAP), Meyer Plc, Portland Paints and Products Nigeria, Austin Laz & Company, Cutix, Beta Glass and Grief Nigeria.

Market capitalisation went up to N4 trillion, following the listing of BUA Cement into the Main Board. Market the capitalisation of industrial goods on the mainboard went up by N1.116 trillion to N1.509 trillion on August 31, 2020, from N392.506 billion to open for the year.

Meanwhile, the sector on the premium the board declined by N175 million to close at N2.491 trillion on August 31, 2020 from N2.666 trillion on January 2, 2020. Also, the subsector index, which is NSE Industrial Goods Index recorded a year-to-date growth of 4.06 per cent as at August 28, 2020.

In January 2020, BUA Cement Plc listed its shares on the NSE to become the third-largest quoted company in the country, adding N1.18 trillion shares to the bourse.

The Company is a product of a merger between the Cement Company of Northern Nigeria (CCNN) and OBU Cement.

Financial analysts noted that the Industrial Goods sector is among the hardest hit by the economic crisis brought about by the COVID-19 pandemic.

According to the official data by the NBS, economic activities in Nigeria in the second quarter (Q2), 2020 contracted by -6.10 per cent, owing mainly to the complete shutdown of movement and business activities in major economic hubs (Lagos, Ogun, FCT, Kano, and Rivers) between April and May 2020 in an attempt to tame the spread of the Coronavirus pandemic by the government.

The manufacturing sector remains a critical segment and plays an integral role in the development and advancement of the Nigerian economy and the sector has contributed significantly to the nation’s economic diversification strategy.

The chief operating officer of InvestData Consulting Limited said that the outbreak and spread of the coronavirus (COVID-19) has severely impacted the world economy with many industries suffering.

He noted that the fragility of household wallets have been laid bare, with statistics now pointing to even weaker consumer sentiments, saying that the knock-on effect of fading demand and weaker oil prices are also stifling earnings of consumer goods companies and the stock market has responded sharply to these challenges by marking these companies down. I

In a report by United Capital Plc on ‘Nigeria Cement Sector in H2, 2020’ expected the cement industry to be on the path of growth, this growth was to be fueled by a huge deficit in the infrastructure space across the continent, the renewed commitment of the Federal Government of Nigeria (FGN) to invest heavily in transport (including road, rail, and ports) and housing infrastructure, and coupled with low cement consumption per capita in Nigeria which stands at 150kg compared to the global average of 561kg

. The Investment house said “Despite the disruption in the supply chain caused by COVID-19, the players in the cement space shows resilient by producing am impressive topline and bottom line across board.

“Looking ahead, we are optimistic about Nigeria’s cement industry in H2- 2020E as we believe that the Economic Sustainability Plan (ESP), if implemented within the time frame stipulated, could raise some hope for the cement industry.