UAC Reports 4% Decline in Profit After Tax in Q1 2022

Despite other income jumping by 603.8% in the first quarter (Q1) ended March 31, 2022, UAC of Nigeria Plc reported a 4.5% decline in profit for the period, according to the unaudited financial statement obtained by Investors King.

Despite other income jumping by 603.8% in the first quarter (Q1) ended March 31, 2022, UAC of Nigeria Plc reported a 4.5% decline in profit for the period, according to the unaudited financial statement obtained by Investors King.

Revenue grew by 25.6% to N27.666 billion in the period under review, while gross profit expanded by 26.5% to N5.075 billion.

As expected operating expenses rose by 25.4% to 3.670 billion. Representing 13.3% of the company’s revenue for the period. Other income grew by a whopping 603.8% to N462 million.

Earnings before interest and tax increased to N1.867 billion, an increase of 62.2% from N1.151 billion filed in the first quarter of 2021.

However, net finance income plunged from N95 million in Q1 2021 to -N910 million in Q1 2022. The decline in net finance dragged profit before tax 4.8% down to N979 million.

Profit after tax for continuing operations moderated by 4% to N642 million. The company’s profit for the period dropped by 4.5% to N639 million.

UAC Key Financial Highlights

• 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.”