In Nigeria, lockdowns were imposed across various states, limiting operational activities in the first quarter. Public and private sector revenues were also hit by lull in economic activities and sudden drop in crude prices, limiting capital spend and purchasing power.
Market capitalisation which stood at N15.691 trillion on January 26, 2017, was down to N13,055 trillion yesterday, representing N2,636 trillion or 20.1 per cent fall, while the All-Share Index, which measures performance of quoted companies closed at 25,027.61, from 26,216.46 representing 1,188.85 points .
According to them, the effect of the pandemic has been predicted to linger and will further affect profitability and their ability to declare dividends to shareholders going forward. In an announcement, it revealed the board had carefully considered the emerging social, operational, financial and economic impact of the COVID-19 pandemic, the outlook for Nigeria for the financial year 2020, and impact on business and cash flows of the group.
In the same vein, one of the leading companies under Transcorp Hotels Plc, started the year on a rather wrong note, recording a loss in the first three months of 2020. But the operating profit declined to N660.7 million from N1.1 billion in the first three months of last year.During the period under review, Transcorp Hotels said there was a spike in its administrative expenses to N2.5 billion from N2.1 billion in the same time of last year, with the net finance costs also rising to N1.4 billion from N673.5 million.
Also, the firm said its cost of sales stood at N21.2 billion during the period in contrast to N31.3 billion posted same time of 2019 while its gross profit went down to N6.2 billion from N11.4 billion. Analysts had earlier predicted that many banks might hold off dividend payments to cut costs, in view of COVID-19 and its attendant economic implications.Banks around the world have either been warned not to pay dividends at all or to be careful with payouts.
Interestingly, even though the banking index of the Nigerian Stock Exchange has been one of the most liquid and best-performing indexes so far in 2020, there are strong indications that many bank shareholders will receive lesser or no dividends in 2020. This is because of the recent economic challenges occasioned by the coronavirus pandemic.