UACN sustains H1 profitability on deleveraged balance sheet

... sees rebound in Animal Feeds segment

The second biggest conglomerate by market capitalization, UAC of Nigeria PLC (UACN) revenue increase 12percent to N41.6b buoyed by higher revenue from one of its revenue segment, Animal Feeds, which accounted for 56percent of the group revenue.

Buoyed by an increase in revenue, and 3percent growth in operating expenses to N5.4bn amidst a 25percent decline in finance cost to N1.8bn, profit before tax increased 61percent year-onyear to N3.4bn in H1.

Another major positive in UACN’ s results was the 25percent decline in finance cost to N1.8bn. The decline in finance cost alongside a 24percent increase in finance income helped forced the net finance cost downwards by 85% year-on-year to N164m in

H1 2019 compared to N1.1bn in H1 2018.

The significant decline in finance cost was on the back of repayment of interestbearing loans and lower borrowing costs, UACN made repayments amounting to N7.2bn in H1 2019, bringing total debt to N17.0bn compared to N24.2bn in FY 2018. The free cash flow of the Group stood at a positive N5.0 bn in H1 2019, compared to a negative N0.6 bn in H1 2018.

The double-digit growth of 12percent in Revenue was driven mainly by growth in only one segment of its six major segments, its Animal Feeds segment(+ 23% y/y).

According to analysts the strong growth was buoyed by recovery of lost market share aided by price cuts implemented in Q4 2018.

“UACN lost market share in 2018 following the aggressive penetration efforts of Olam Feeds which intensified competition,”

Selling and distribution expenses grew to 2.72bn yearon-year from 2.44 in H1 2018, however, administrative expenses dropped to N3.05bn from 3.21bn in H1 2018.

Sadly, the topline performance from other heavyweight segments failed to impress- Revenue from the Paints segment tanked slightly by 1percent accounting for 13percent of revenue, revenue from packaged food segment was flat accounting for 13percent of revenue, real estate segment accounted for 4percent of revenue where revenue grew 26% year-onyear and 101percent quarteron-quarter

UACN is a conglomerate with activities in animal feeds, paints, packaged foods, Quick Service Restaurants, Logistics and Real Estate.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar