West African Stock Exchange Sees Record Profit, but Growth Slows

(Ecofin Agency) – Thirty-one companies listed on the West African Regional Stock Exchange (BRVM) have reported positive net margins for 2023, while four have announced losses. Despite reaching a record level, the cumulative net profit and dividend announcements have grown at a slower pace than in the previous two years.

Based on the financial results of 35 BRVM-listed companies, excluding Ecobank, the total net profit stands at CFA1,007.2 billion, with 31 companies contributing CFA1,039 billion in net margins, offset by CFA31.6 billion in losses. This performance represents the highest net profit level on the BRVM since 2020, with the trend expected to continue as most major companies have already released their results.

The largest contributors to this net profit are Orange CI and Sonatel, subsidiaries of the French telecommunications group Orange, which reported net profits of CFA154.9 billion and CFA331.7 billion, respectively, for 2023. Oragroup, a Togolese banking group, currently shows the worst performance with a loss of CFA18.18 billion.

Behind this record-breaking figure, however, lies a slowdown. The growth rate of net profit for companies that have reported their performance, which was 30% in 2021 and 10% in 2022, has dropped to 3%. This pace of margin growth has also affected dividends. With 57% of the profit generated in 2023 announced for distribution to shareholders, the dividends already announced (CFA574 billion) are up by only 1.2%. This is less than the +33% of 2020, and above all, the +38.7% of 2022. Also, the dividend yield based on the share price in 2023 (7.8%) is slightly down from that at the end of 2022 (8.4%).

The BRVM remains a key financing lever for companies, but it may need a new boost. The stock exchange is competing with phenomena such as inflation, which reduces purchasing or investment power, and the development of a secondary market for public securities by the UMOA-Titres Agency, which will expand the offer of financial products likely to attract capital.

A promising avenue for the BRVM’s expansion lies in its capacity to entice additional companies to join its listings or to attract increased foreign investment, a trend already observed with certain securities on the exchange. Nevertheless, realizing this potential necessitates adjustments across various fronts, including more dynamic and comprehensive financial communication from entities whose stocks or bonds are listed.

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