Rising Operating Costs Threaten Nigeria’s Packaging Sector as Companies Face Delisting and Heavy Losses
Summary of Key Issues Affecting Nigeria’s Packaging Industry:
Impact of Economic Pressures on the Packaging Sector
The packaging sector on the Nigerian Exchange Ltd. (NGX), comprising companies like Tripple Gee, Grief Plc, and Beta Glass, is grappling with severe financial pressures due to inflation, high-interest rates, forex volatility, and inadequate infrastructure. The sector has faced a nearly 20% year-to-date (YTD) loss, raising concerns among shareholders about sustainability.
Company Performance and Losses
Tripple Gee: Reported a significant downturn, with a 2023 third-quarter sales drop to N433.99 million from N715.48 million the previous year. The company’s net loss reached N99.63 million, down from a net income of N82.38 million. In its financial year ending March 31, 2024, profit after tax declined 94.3% to N7 million. Tripple Gee’s stock value has fallen by 15.4% YTD, with a dramatic 56% loss since September.
Grief Plc: Amidst struggles, Grief Plc is moving towards delisting from NGX due to unsustainable operational costs. The company’s revenue and profits have plunged, and it last reported a positive performance in 2017. Its chairman highlighted the impact of losing major clients and the inability to offset costs despite multiple price hikes.
Beta Glass: Began the year at a share price of N59.40, but has since declined by 17.6%.
Shareholder Concerns and Calls for Government Action
Shareholders are increasingly alarmed by the sector's struggles. They have called for government interventions to:
1. Stabilize the forex market.
2. Provide incentives to local manufacturers to support growth.
3. Establish intermediary companies to help manufacturers access foreign exchange.
Sector Outlook and Recommendations
Without urgent intervention, the packaging sector faces potential mass layoffs and more delistings. Shareholders suggest diversification into agriculture and fast-moving consumer goods (FMCG) to mitigate reliance on manufacturers.
Summary of Key Issues Affecting Nigeria’s Packaging Industry:
Impact of Economic Pressures on the Packaging Sector
The packaging sector on the Nigerian Exchange Ltd. (NGX), comprising companies like Tripple Gee, Grief Plc, and Beta Glass, is grappling with severe financial pressures due to inflation, high-interest rates, forex volatility, and inadequate infrastructure. The sector has faced a nearly 20% year-to-date (YTD) loss, raising concerns among shareholders about sustainability.
Company Performance and Losses
Tripple Gee: Reported a significant downturn, with a 2023 third-quarter sales drop to N433.99 million from N715.48 million the previous year. The company’s net loss reached N99.63 million, down from a net income of N82.38 million. In its financial year ending March 31, 2024, profit after tax declined 94.3% to N7 million. Tripple Gee’s stock value has fallen by 15.4% YTD, with a dramatic 56% loss since September.
Grief Plc: Amidst struggles, Grief Plc is moving towards delisting from NGX due to unsustainable operational costs. The company’s revenue and profits have plunged, and it last reported a positive performance in 2017. Its chairman highlighted the impact of losing major clients and the inability to offset costs despite multiple price hikes.
Beta Glass: Began the year at a share price of N59.40, but has since declined by 17.6%.
Shareholder Concerns and Calls for Government Action
Shareholders are increasingly alarmed by the sector's struggles. They have called for government interventions to:
1. Stabilize the forex market.
2. Provide incentives to local manufacturers to support growth.
3. Establish intermediary companies to help manufacturers access foreign exchange.
Sector Outlook and Recommendations
Without urgent intervention, the packaging sector faces potential mass layoffs and more delistings. Shareholders suggest diversification into agriculture and fast-moving consumer goods (FMCG) to mitigate reliance on manufacturers.
