UAC of Nigeria – Q1 2022 revenue up 25.6% to 27.7 billion

By Published On: May 13th, 2022Categories: Corporate announcement, Earnings

U.A.C of Nigeria Plc ( Q12022 Interim Report

Lagos, 29 April 2022 – UAC of Nigeria PLC (“UAC” or the “Group”) announced double digit growth in revenue, operating profit, and earnings per share for the first quarter ended 31 March 2022.


  • Revenue of ₦27.7 billion, 25.6% increase year on year. Topline growth across all business segments: Animal Feeds and Other Edibles (+18.0%), Paints (+81.2%), Packaged Food and Beverages (+9.9%), and Quick Service Restaurants (+30.1%).
  • Gross profit 26.5% higher YoY at ₦5.1 billion; Gross margin of 18.3% is 13 bps higher as price increases and higher sales offset rising raw material costs.
  • Operating profit 62.2% higher YoY at ₦1.9 billion, margin expansion of 152 bps to 6.8%, led by the Paints segment.
    Underlying operating profit of ₦1.5 billion, is 28.6% higher YoY, after adjusting for the profit of N386 million recognised on the sale of non-core investment property.
  • Profit before tax 4.8% lower than Q1 2021 at ₦979 million. Profitability was impacted by higher finance costs YoY.
  • Earnings per share 50.3% higher than Q1 2021 at 18 kobo. The increase reflects the benefit of recognising 100% of UAC Foods Limited’s earnings versus 51% in Q1 2021.

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

“We delivered double-digit growth in revenue, operating profit, and earnings per share for the first quarter and continue to manage escalating raw material and energy costs. Working capital levels and short-term debt are elevated on account of the decision to increase inventory holding in the Animal Feeds and Other Edibles segment to mitigate the risk of supply chain disruptions. We are closely monitoring inventory levels and leverage and expect the negative impact of interest expense to unwind as inventory levels normalise. Earnings per share increased 50% year on year, reflective of the earnings accretive acquisition of the 49% stake in UAC Foods which we did not own in the first quarter of 2021.

For all our businesses, the impact of rising inflation is a key focus and our management teams remain focused on proactive pricing. We are mindful of the recent events in Russia and Ukraine and resultant supply disruptions of key commodity inputs including wheat, vegetable oil, maize and fertilizer. We remain committed to executing our key priorities to simplify our structure and processes, drive profitable growth across our core operating segments, and enhance shareholder value.”

Significant transactions / new developments

The following transaction in respect of a subsidiary company is responsible for key differences when comparing earnings in Q1 2022 to Q1 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 Q1 2020 where only 51% of the profit attributable to equity holders of UFL was recognised by UAC.

Group Performance and Financial Review: Q1 2022

Revenue in 2022 increased 25.6% YoY to ₦27.7 billion supported by sales growth across all operating segments. Animal Feeds and Other Edibles segment (+18.0% YoY) driven by price increases to offset rising raw material costs. Paints segment (+81.2% YoY) on account of double-digit volume growth and price increases. Packaged Food and Beverages segment (+9.9% YoY) driven by volume growth in the water, and dairy categories and price increases across all categories; and the Quick Service Restaurants segment (+30.1% YoY) driven by additions to company-owned restaurants (corporate stores) and improved performance of existing stores.

Gross profit in 2022 increased by 26.5% YoY to ₦5.1 billion and the gross profit margin improved 13 basis points to 18.3%.Margin expansion was largely on account of improved sales in excess of input cost escalation. Operating profit was ₦1.9 billion in 2022, 62.2% higher than the ₦1.2 billion recorded in 2021. The increase is attributable to improved gross profit on account of revenue growth across all segments as well as profit on the sale of investment properties (₦386 million). Operating profit margin expanded 152 bps in the first quarter, led by the Paints segment which delivered 623bps of operating margin expansion. Operating expenses as a percentage of sales remained flat YoY at 13.3%.

The Group recorded higher finance costs on account of increased short-term borrowings in the Animal Feeds and Other Edibles segment to support efforts to build inventory. In addition, ₦336 million of finance cost represents impact of non – cash mark-to-market losses on financial instruments. Finance income decreased 30.5% YoY due to a lower amount of cash available for investment.

Share of profit from associate companies was ₦21 million compared to the share of loss from associate companies of ₦218 million recorded in Q1 2021. Profit before tax was ₦979 million, 4.8% lower than the ₦1.0 billion recorded in Q1 2021. Profit after Tax from continuing operations was ₦642 million compared to ₦669 million in Q1 2021. Total profit for the period was ₦639 million in 2022 impacted by a ₦3 million expense incurred as part of the voluntary winding up process of UNICO CPFA Limited, a discontinued operation.

Earnings per share was 18 kobo, 50.3% higher than 12 kobo recorded in Q1 2021. UAC’s purchase of Tiger Brands’ 49% stake in UAC Foods Limited in September 2021, was earnings accretive as UAC now recognises 100% of UAC Foods’  earnings versus 51% in Q1 2021.

Free Cash Flow for the period was negative ₦12.1 billion in 2022, compared with negative ₦12.5 billion in 2021. Free cashflow was impacted by the strategy to increase inventory levels in the Animal Feeds & Other Edibles and Paints segments.

Leverage (net debt to LTM EBITDA) of 1.3x at 31 March 2022, compared to 1.5x in 31 December 2021 as a result of ₦1.9 billion net increase in long-term third-party borrowings. Increase in short term borrowings was primarily to support working capital and to mitigate escalating raw materials prices in the Animal Feeds & Other Edibles segment.
Annualised Return on Equity from continuing operations at the end of March 2022 was 4.4%, compared to 3.0% in Q1 2021. Annualised Return on Invested Capital (ROIC) was 422 basis points higher at 11.6% (Q1 2021: 7.3%).