Good corporate news out of Africa – Imara

Investment in Africa is much more than a ‘commodity sector play’ as the latest report to international investors by the Imara African Opportunities Fund makes clear.

At a time when resource counters were under pressure in many markets, the fund, managed by the Botswana-registered Imara financial services group, reported good corporate results from African jurisdictions.

John Legat, Harare-based manager of the fund, commented: “News out of Africa has generally been good. A number of foreign multinationals have reported their earnings of late and many commented on the strength of their African businesses.

“Unilever noted that their revenues across Africa were up by 15%; PZ Curzon, listed in UK, had strong results driven by Nigeria; BAT noted an 8% profit growth in Africa and the Middle East, with volume and price increases in Nigeria and Egypt. Interestingly their volumes were down in South Africa.

“SAB Miller then announced that their volumes in Africa, ex-South Africa and Zimbabwe, were up by 8% with Zambia, Botswana and Angola given special mention.”

Legat pointed out that rising fuel and fuel prices are affecting African markets, but “not necessarily negatively impacting volume growth”.

He added: “As real incomes rise across Africa and the middle classes grow, volumes should continue to rise as they are coming off of a low base.”

The Imara African Opportunities Fund takes positions in a wide range of African equity markets. Imara also manages funds with dedicated focus on Zimbabwe, Nigeria and East Africa.

Legat quoted Nigerian Breweries as an example of strong growth potential with no direct linkage to resources.

He noted: “Nigerian Breweries reported a superb set of six-month figures to the end of June with growth in sales, margins and net profit. The latter increased by 46%.

“The company is a cash machine funding all its own capex – which remains substantial as it grows capacity to meet demand – but also funding a handsome dividend. The estimated yield for this year is over 6% yet the stock trades at 14 times this year’s earnings.”