It’s not necessary to wire money to a far-flung African locale to invest in the rise of the African consumer. Here are five companies that are making big bets on the continent and conveniently trade on the New York Stock Exchange.
H.J. Heinz (HNZ:US)
Our favorite ketchup-maker is bullish on Africa, projecting consumer spending in its Africa and Middle East region will grow from $900 billion to $1.4 trillion over the next eight years.
Heinz operates production facilities in South Africa and Egypt and is making a strong push into Nigeria. The region represents just a tiny percentage of group sales, but it is growing quickly. The company recently disclosed that it enjoys 21% sales growth in Africa excluding South Africa, and 10% growth in South Africa. It attributes this success to a quality product sold in package sizes that are affordable to the region’s brand-loyal, low-income consumers.
As Africa’s healthcare systems improve, global medical companies are starting to see opportunity. Memphis-based medical device-maker, Medtronic, invested $2 million in Kenya, Rwanda, and Uganda last year to provide spinal devices and training to local surgeons. The company estimates that 2 million people from the region would be candidates for devices manufactured by the company.
It appears that the strategy is beginning to bear fruit. Revenue from its Middle East and Africa segment increased 16% during the most recent quarter. Emerging markets now account for 11% of Medtronic’s sales, and revenue from these fast-growers surged 20% during the fourth quarter of the 2012 fiscal year.
Portugal Telecom (PT:US)
PT has been hard at work in Africa this past year. In Cape Verde, it completed miles of undersea fiber-optic cable and launched 3G networks in the island nations of Cape Verde and Sao Tome & Principe. In Namibia, they paved the way for 4G network service. And in Angola (its most important African asset), they rolled out a fiber-optic backbone that should allow them to better market their 2G and 3G service there.
The company now generates the majority of its revenue overseas. In 2011, its African operations contributed 5.8% of group EBITDA. It’s Angolan unit grew EBITDA at an impressive 16.1% clip during the year.
This Swiss-based company is the world’s largest agricultural chemical manufacturer. It also produces seed.
Its rival, Dupont recently bought a key South African seed firm that Syngenta also had designs on. With the loss of the deal, CEO Mike Mack essentially conceded South Africa to his competitor. He said his firm is now focused on organic growth instead of a big acquisition. There simply aren’t any more great takeover targets left.
So, Syngenta will hire 700 workers and invest $500 million in order to build a presence in seven other African nations, including Kenya and Nigeria.
The company already derives $500 million in sales from Africa — roughly 4% of the group total. But this modest sum could grow quickly. Analysts believe African demand for herbicide could quadruple to $4 billion in ten years — and the crop seed market is forecast to double during that time frame.
Verifone Systems (PAY:US)
Verifone is a leading supplier of point of sale terminals. The company is in the midst of a big push into emerging markets and the segment now represents 45% of group sales — nearly double what it did eight years ago. It presently has point of sale terminals 110 countries around the world – including Nigeria, where it will install 100,000 payment devices this year. It has its sights set on Ghana and Kenya, too.
During the company’s most recent earnings conference call, CEO Douglas Bergeron said Verifone’s Sub-Saharan Africa operations have been performing “phenomenally well” with growth above 20%.
[Disclosure: I have no position in any stock mentioned in this article, and I have no intention of taking any within the next 72 hours.]