UAC Nigeria posted a pre-tax profit of N15 billion in the first half of 2024, marking a 373% year-on-year increase from the N3.16 billion posted in H1 2023.
According to the group’s financial statement for the period ended June 30, 2024, the group recorded a revenue of N83.3 billion during the half-year, posting a 57.5% YoY increase from the N52.9 billion posted in H1 2023.
In the second quarter, the group posted a revenue of N42.7 billion, marking a 51% YoY growth from the N28.3 billion posted in Q2 2023.
During this period, most of the group’s revenue was generated from its edible oils and livestock feeds businesses, Livestock Feeds Plc and Grand Cereal Limited, amounting to N38.5 billion. UAC Foods generated N27.6 billion in revenue, while Chemical and Allied Paints (CAP) Plc generated N15.6 billion in revenue.
However, the most profitable unit of the group was UAC Foods during the half-year, as it generated a pre-tax profit of N4.1 billion, while CAP Plc posted a pre-tax profit of N2.67 billion. In the first half of 2023, the company’s paints business, CAP Plc was the most profitable segment, with a N1.9 billion pre-tax profit, followed by UAC Foods with a N1.3 billion pre-tax profit.
The 224% year-on-year growth in UAC Foods’ half-year pre-tax profit is a reflection of the level of efficiency that section of the group has achieved over the past year.
Key Highlights H1 2024 vs H1 2023
- Revenue: N83.3 billion, +57% YoY
- Cost of sales: N64.5 billion, +46% YoY
- Gross profit: N18.7 billion, +117% YoY
- Selling and distribution expenses: N5.1 billion, +23% YoY
- Operating profit: N6.7 billion, +18994% YoY
- Net finance income: N7.8 billion, +188% YoY
- Profit before tax: N15 billion, +373% YoY
- Profit for the period: N9.5 billion, +677% YoY
- Earnings per share: N3.04, +474% YoY
- Total assets: N124.8 billion, +11% YoY
- Net cash flows generated from operating activities: N8.4 billion, +228% YoY
- Cash and cash equivalents at the end of the period: N32.8 billion, +119% YoY
Commentary: During the half-year, UAC’s revenue growth outpaced the group’s cost of sales, thus leading to a significant growth in gross profit. The bank’s net finance income of N7.8 billion also propelled it to a significant profit growth.
The group’s tax liabilities during the period increased by 11% to N5.9 billion from N5.3 billion at the end of 2023, although the group made a tax payment of N1.9 billion during the six-month period.
In six months, UAC Nigeria incurred an expense of N2.48 billion on electricity, marking a 20% YoY increase from the N2.06 billion spent in H1 2023.
UAC Nigeria owns majority stakes in Grand Cereal Limited, Livestock Feeds, UAC Foods, Mr Biggs, Debonairs Pizza, and CAP Plc. The group also owns 42.85% and 43% minority stakes in UPDC Plc and MDS Logistics respectively.
UPDC Plc and MDS Logistics posted N1.18 billion net profit in the first half of the year, with UAC’s share of the profit being N475.4 million.
UAC’s dollar-denominated assets
The net finance income was driven by an exchange gain of N9.4 billion during the half year, in contrast with a N4.4 billion exchange gain recorded in H1 2023.
While other companies domiciled in Nigeria have been reeling from the impact of the Naira devaluation, UAC’s case has been different. While the company has significantly low FX-exposure on its liabilities, it has FX-exposed assets.
The company is invested in six Eurobonds, including Ecobank’s 2024, 2026, and 2031 Eurobonds, Seplat’s 2026 Eurobond, and the Federal Government’s 2025 and 2029 Eurobonds.