The third quarter (or Q3) of 2024 brought challenges and opportunities to Nigeria’s stock market, with the agricultural and food sectors taking centre stage. Amid rising inflation and soaring production costs, some companies displayed remarkable resilience, posting impressive stock gains, while others struggled to maintain their footing. These divergent outcomes reveal the contrasting realities faced by different sectors, underscoring the varying levels of adaptability in Nigeria’s business landscape.
Agricultural sector — across-the-board gains
The agricultural sector demonstrated impressive resilience in Q3 2024, with all tracked companies posting positive stock growth. Despite challenges like inflation and rising production costs, these companies delivered solid performances, reflecting the sector’s determination to thrive and innovate amidst economic fluctuations.
Ellah Lakes Plc led the pack with a remarkable 64.00% increase, driven by renewed investor confidence in its diversification strategies. One report mentioned that stockbrokers were especially encouraged to invest in the country after a visit to its plantation in Edo State. Besides the 200 hectares of palm it added to its assets, the company is building a piggery that will produce 5,000 tonnes of pork annually.
Similarly, Livestock Feeds Plc posted a strong gain of 51.35%, benefiting from heightened demand for livestock products. In addition, the company had reported its highest earnings per share in over 13 years during the first half of the year. This performance likely urged more investors to buy its stock as it promised gains when they sell, increasing its price on the exchange forum.
Presco Plc and Okomu Oil Palm Plc, two key players in the palm oil industry, saw their stocks rise by 37.04% and 24.53% respectively, thanks to sustained global demand for palm oil. Both companies continue to receive investments as their performance improves because local markets bear more weight on thier revenue than exports. Thus, ncreasing costs of the commodity represents gain for the company but naira devaluation has little effect on them.
Lastly, FTN Cocoa Processors Plc registered a modest gain of 2.26%, reflecting steady, if not spectacular, growth amidst operational challenges. However, the producer is facing challenges that analysts say could lead to bankruptcy. Its operations are dwindling while its liabilities increase, largely due to competition from foreign buyers ready to pay premium for raw cocoa beans to take to their countries for processing.
Food companies — a mixed bag of gains and losses
The consumer goods sector saw a more varied performance in Q3 2024, with some companies delivering strong results while others faced significant setbacks. The sector grappled with rising input costs, inflation, and supply chain issues, resulting in contrasting outcomes.
Honeywell Allied Industries Plc emerged as a standout performer, with its stock surging 49.70%. Strong demand for its flour and pasta products and operational efficiency fueled this growth.
Flour Mills Nig. Plc followed closely with an impressive 41.71% gain, thanks to its ability to navigate supply chain challenges and maintain steady production. The food comapny is working on an African expansion that requires restructuring.
On the other hand, BUA Foods Plc posted a modest increase of 3.95%, reflecting steady but unspectacular growth. The company reached a capacity expansion deal with Italian company, FAVA, to increase its pasta production capacity from 400,000 tonnes to 900,000 tonnes.
Cadbury Nigeria Plc also experienced a modest recovery, with its stock up 7.53% after stabilising operations in its confectionery and beverages segments.
However, some companies struggled in Q3. Consumer goods heavyweight, Dangote Sugar Refinery Plc saw a steep decline of -13.95%, weighed down by high production costs and increased competition. Similarly, N Nig. Flour Mills Plc experienced the sharpest drop, with its stock falling -33.95% due to supply chain disruptions and operational inefficiencies.
Nascon Allied Industries Plc and Nestle Nigeria Plc both saw slight declines of -3.51% and -3.26%, respectively, as rising costs impacted their profitability. Union Dicon Salt Plc had a minimal dip of -1.23%, suggesting that the company was relatively stable despite the pressures.
Conclusion
The third quarter of 2024 highlighted the resilience and challenges faced by Nigeria’s agricultural and consumer goods sectors. While agricultural companies demonstrated consistent growth across the board, navigating economic pressures with agility, the consumer goods sector experienced a mix of successes and setbacks. High performers like Ellah Lakes Plc and Honeywell Allied Industries Plc capitalized on strong market demand and operational efficiencies, while others, such as Dangote Sugar Refinery Plc and N Nig. Flour Mills Plc, struggled with rising costs and competitive pressures.
This quarter’s contrasting outcomes underscore the complexities of operating in Nigeria’s evolving economic landscape. The agricultural sector continues to show promise as a stable driver of growth, while the consumer goods sector’s performance reflects the need for strategic innovation and adaptability in the face of persistent challenges. As we move into the final quarter of 2024, the key question will be whether these sectors can sustain their momentum or find new ways to overcome their hurdles.
