The largest Nigerian companies listed on the Nigerian Stock Market spent N616.2 billion on investments in the first quarter of the year, according to a Nairalytics analysis of their financial statements.
According to analysis by the research arm of Nairametrics, the capital expenditure of the largest companies on the NGX, from agriculture, cement manufacturing, consumer packaged goods, healthcare conglomerates, insurance, industry, construction and oil and gas sector doubled from N239.14 billion recorded in the first quarter of 2021 to N616.2 billion in the review quarter.
This represents a 158% year-on-year increase and a 237% increase from the N183.1 billion recorded in the corresponding period of 2020. It should be noted that the figures quoted are figures net disbursements, which means that investment income in the period has been deducted. The list includes 33 of the largest publicly traded companies.
Cash spent on investing activities could include purchase of property, plant and equipment (PP&E), purchase of financial assets, which could include bonds, treasury bills, foreign deposits, among others.
Tracking business cash flow from investing activities is important because it shows how a business allocates its long-term cash. It also shows how the business grows by investing in properties, factories and equipment. These investments could help the company generate cash flow in the future.
- The cement manufacturing giant and the most capitalized industrialized company in the country, Dangote Cement, recorded a net cash flow of 255.67 billion naira in the first quarter of the year, 222% more than the 79.35 billion naira recorded in the corresponding period of 2021.
- The significant increase is due to the N224.1 billion loan to its parent company, Dangote Industries, as it acquired PPE worth N37.1 billion from N13.5 billion. naira spent in the first quarter of 2021.
- Telecom leader and largest telecom operator in Nigeria by customer base, MTN Nigeria, followed with a net investment of N246.36 during the reporting period, up 346.7% from the 22 .15 billion naira recorded during the same period of the previous year.
- Growth in its net cash flow from investing activities was driven by increased acquisition of other intangible assets from N61.52 billion recorded in the first quarter of 2021 to N141.53 billion. in the first quarter of 2022. In addition, the acquisition of fixed assets increased to 52.16 billion naira, the movement of restricted cash increased from 3.27 billion naira to 64.45 billion naira. naira year on year.
- Third on the list, Seplat Energy. The upstream oil and gas company spent a net cash of 64.23 billion naira in the first quarter of 2022, representing an increase of 213.9% from the 20.46 billion naira recorded in the corresponding period of 2021.
- The company made “investment deposits” worth N53.41 billion, while it paid N10.07 billion for the acquisition of oil and gas properties.
The others include BUA Cement (17.33 billion naira), Mansard Insurance (8.63 billion naira), Nigerian Breweries (7.5 billion naira) and International Breweries (7.41 billion naira).
why it matters
It is important for a company to reinvest in its business because it can allow the company to develop or expand its existing premises, improve the quality of the product or service and strengthen the team. By doing so, the company could get more income from its investments in the future.