On the heels of impressive earnings in nine months ended September 30, 2021, it has emerged that double-digit inflation, foreign exchange devaluation, among other factors impacted the 10 most valued companies on the Nigerian Exchange Limited (NGX) as their Operating Expenses (OPEX) went up by 16 per cent to N1.5trillion from N1.34 trillion in the comparable period of 2020.
Recently, the National Bureau of Statistics (NBS) announced that Nigeria’s inflation rate closed September 2021 at 16.63 per cent from 16.47 per cent reported in January 2021.
Inflation rate in January was 16.47per cent but increased to 17.33 per cent in February. The bureau had disclosed that the country’s inflation rate hits all-time high in March 2021 to 18.17 per cent.
Aside from the double-digit inflation rate, the marginal Naira/US dollar rate movement in the official market also resulted in the increase in general prices of goods and services.
Analysts said hike in listed banks OPEX was majorly driven by regulatory costs, stressing that challenges witnessed in the process of disturbing goods and services compounded on listed companies OPEX in the period under review.
They expressed that cost of buying diesels and trucks materials in the period under review have increased significantly, a major factors also contributing to cost of goods and services distribution.
Analysis of the companies results showed that MTN Nigeria Plc, followed by Access bank Plc and Zenith Bank Plc recorded the highest value of OPEX in the nine months under review, while Nigeria Breweries Plc recorded the highest percentage change.
The breakdown revealed that MTN Nigeria reported total OPEX of N371.28billion in nine months of 2021, an increase of 24.3 per cent from N298.75billion reported in nine months of 2020.
The Chief Executive officer, MTN Nigeria, Karl Toriola in a statement to investors said: “We are making good progress with our efficiency at all costs approach to maintain cost discipline and improve efficiency. However, the continued impact of Naira depreciation on lease rental costs, acceleration in our site rollout, and the ongoing COVID-19 related expenditure resulted in operating expenses increasing by 24.3per cent.
“Capital expenditure (Capex) in the period was 34.4 per cent higher to N261.1 billion, as we continued to invest in our network to maintain service quality and aggressively expand our footprint in terms of 4G with additional 2,723 sites. Notwithstanding, we recorded a healthy free cash flow of N373.4 billion, up by 23per cent. Despite a 27.9per cent increase in core capex […]
