UAC of Nigeria – HY 2022 revenue up 11% to N52 billion

By Published On: August 1st, 2022Categories: Corporate announcement, Earnings
U.a.c Of Nigeria Plc 2022 Interim Results For The Half Year

U.A.C of Nigeria Plc (UACN.ng) HY2022 Interim Report

Lagos, 29 July 2022 – UAC of Nigeria PLC (“UAC” or the “Group”) announced its unaudited results for the half year ended 30 June 2022.

Highlights

  • Revenue of ₦52 billion, 11.9% increase year on year. Topline growth recorded across all business segments: Animal Feeds and Other Edibles (+7.6%), Paints (+28.8%), Packaged Food and Beverages (+6.3%), and Quick Service Restaurants (+28.2%).
  • Gross profit 7.4% higher YoY at ₦8.9 billion; however, gross margin 73 bps lower at 17.2% on account of rising raw material costs.
  • Operating profit 9.4% lower YoY at ₦1.6 billion and margin contraction of 73 bps to 3.1% impacted by losses in the Animal Feeds and Other Edibles segment.
  • Profit before tax of ₦12 million impacted by lower operating profit as well as higher finance costs YoY.
  • Loss per share of 18 kobo (H1 2021: positive earnings per share of 5 kobo).

Commenting on the results, Group Managing Director, Fola Aiyesimoju, stated:

“Our results for the first half of the year were significantly impacted by underperformance in our animal feeds and edible oils segment where we took significant leverage to fund inventory purchases in anticipation of meaningful volume growth. Challenging market conditions resulted in margin compression in the sector, excess inventory and profitability eroded by finance costs. We have taken steps to address this including cost management, aggressive inventory reduction and initiatives to lower finance cost. Despite very difficult trading conditions, we remain encouraged by performance across the rest of our businesses. The second quarter was particularly challenging with accelerating inflation and slower growth.”

Corporate action: Scrip dividend update

UAC Shareholders approved a scrip dividend and the cancellation of the remaining unissued share capital of the Company at the Company’s annual general meeting on 22 June 2022. The Company is in the process of registering the new 44,835,076 ordinary shares, which will be allotted to shareholders who elected for scrip dividend, with the Securities and Exchange Commission.

Significant transactions/new developments

The following transaction in respect of a subsidiary company is responsible for key differences when comparing performance in H1 2022 compared to H1 2021:

1. In September 2021, UAC acquired Tiger Brands Limited’s minority shareholding (49%) in UAC Foods Limited (UFL) for a cash consideration of N3.92 billion. Consequently, UFL is now a wholly owned subsidiary of UAC and the total profit attributable to equity holders of UFL was recognised by UAC versus H1 2021 where only 51% of the profit attributable to equity holders of UFL was recognised by UAC.

Group Performance and Financial Review: H1 2022

Revenue in H1 2022 increased 11.9% YoY to ₦52 billion supported by sales growth across all operating segments. Animal Feeds and Other Edibles segment (+7.6% YoY) driven by price increases to offset rising raw material costs. Paints segment (+28.8% YoY) on account of price increases and retail footprint expansion. Packaged Food and Beverages segment (+6.3% YoY) driven by price increase in the snack category, improvement in production efficiency in the water category and improved distribution in the dairies category; and the Quick Service Restaurants segment (+28.2% YoY) driven by additions to company-owned restaurants (corporate stores) and growth in logistics sales.

Gross profit in H1 2022 increased by 7.4% YoY to ₦8.9 billion, however gross profit margin contracted by 73 basis points to 17.2%. Margin contraction was largely on account of input cost escalation across all businesses.

Operating profit was ₦1.6 billion in H1 2022, 9.4% lower than the ₦1.8 billion recorded in H1 2021. The decrease is attributable to the poor performance in our Animal Feeds and Other Edibles businesses. Operating profit margin also contracted 73 bps to 3.1%. Operating expenses as a percentage of sales increased 50 bps YoY to 15.3%.


U.A.C of Nigeria Plc (UACN.ng)

Share price: 10.80 NGN (0.00 | 0.00% – 16/08/22)