UAC of Nigeria PLC reported a 9% increase in revenue to N119 billion in the 2023 financial year as key segments recorded solid growth in the year ended 31 December 2023.

FY 2023 Highlights

• ₦119bn revenue, 9% higher than 2022, driven by sales growth across all operating segments: Paints (+24%), Packaged Food and Beverages (+23%), Quick Service Restaurants (+21%), and Animal Feeds and Other Edibles (+2%).
• ₦21.8bn gross profit, 53% higher. Gross margin expanded 536 bps to 18.4% due to price increases implemented to mitigate the impact of inflation, volume growth in the Packaged Food and Beverages and Paints segments, as well as improvements in production efficiency in the Animal Feeds segment.
• ₦9.1bn operating profit compared to operating loss of ₦2.4bn in 2022. Improved performance in 2023 due to:
– Higher revenue across all segments driven by a mix of volume growth and price increases.
– Cost saving initiatives implemented at our Animal Feeds and Other Edibles segment.
– Gain from disposal of non-core property assets.
• Profit before tax of ₦12.7bn. Underlying profit before tax, adjusted for exceptional items, of ₦1.7bn compared to loss before tax of ₦4.4bn recorded in 2022.
• Earnings per share of 276 kobo (2022: -107 kobo).
• ₦25.3bn cash and cash equivalents, 57% higher than ₦16.2bn in 2022.

Commenting on the results, Group Managing Director, Fola Aiyesimoju, stated: “On our earnings call for the 2022 financial year, we stated that our biggest objective was to reverse the performance trend of the Animal Feeds business and to address the challenges that negatively impacted performance of our Packaged Food and Beverages business.

“We are pleased to have successfully executed on this which, together with sound risk management practices, drove performance in 2023. Our Packaged Food and Beverages business grew profitability by N2.9bn from a loss of N144mn in 2022 to a profit of N2.7bn in 2023.

“Initiatives to drive Animal Feeds performance bore fruit in the fourth quarter and the business recorded N3.8bn in incremental profit, from a loss of N3.5bn in Q4 2022 to a profit of N259mn in Q4 2023. Our focus in 2024 will be on sustaining and improving performance across our businesses.”

Group Performance and Financial Review: FY 2023

Revenue in 2023 increased 9% year on year (“YoY”) to ₦119 billion supported by revenue growth in all segments. Paints segment (+24.2% YoY) on account of price increases and positive impact of growth strategy on volumes; Packaged Food and Beverages segment (+23.1% YoY) due to volume growth in snacks and spring water categories, as well as price reviews across board; Quick Service Restaurants segment (+20.8% YoY) driven by increase in company-owned restaurants (corporate stores), and Animal Feeds segment (+1.5% YoY) driven by price increases to offset rising raw material costs.

Gross profit in 2023 increased by 53% YoY to ₦21.8 billion and gross profit margin expanded by 536 basis points to 18.4%. Margin improvement was largely on account of topline growth in all segment and production efficiency in the Animal Feeds and other Edibles segment.

Operating Profit was ₦9.1 billion in 2023 (2022: operating loss of ₦2.4 billion). The improvement in profitability is attributable to gross profit expansion and gain from sale of non-core property assets. Underlying operating profit, adjusted for gain from property sale and non-recurring impairment charge, was ₦2.6bn. Operating profit margin expanded 987 bps to 7.7%. Operating expenses as a percentage of sales increased 110 bps YoY to 16.9%.

Operating expense of ₦20bn was 16.1% higher compared to 2022 reflecting the impact of inflation on operating cost as well the effect of Naira depreciation on expenses pegged to foreign currency.

The Group recorded a Net finance income of ₦2.7 billion in 2023 compared to the Net finance cost of ₦2.1 billion recorded in 2022. Finance income was positively impacted by higher cash from disposal of non-core assets as well as gains in the treasury portfolio recorded during the year.

Share of profit from associate companies was ₦860million, compared to ₦103 million in 2022 driven expansion of MDS’ transport business. Profit before tax was ₦12.7 billion, compared to the loss before tax of ₦4.4 billion recorded in FY 2021. Underlying PBT, adjusted for exceptional items was ₦1.7bn. Total profit for the period was ₦7.8 billion in 2023 impacted by tax expense of ₦4.9 billion, compared to Loss after tax of ₦4 billion in 2022.

Earnings per share was 276 kobo in 2023 compared to 107 Kobo loss per share recorded in 2022.

Free Cash Flow for the period was ₦4.9 billion in 2023 compared with ₦9.6 billion in 2022, due to increased inventory and receivables in 2023. Return on Equity from continuing operations at for 2023 was 16.2%, compared to a negative 7.3% in 2022. Return on Invested Capital (ROIC) was 2,517 bps at a 20.3% (2022: negative 4.9%).

Group Performance and Financial Review: Q4 2023

Revenue in Q4 2023 increased by 18% YoY to ₦37.2 billion from ₦31.5bn in Q4 2022. All operating segments recorded revenue growth: Packaged Food and Beverages (+79%), Paints (+40%), Animal Feeds (+2.4%), and QSR (+0.7%).

Gross profit of ₦7.7 billion was 300% higher compared to ₦1.9 billion in Q4 2022. Gross profit margin of 20.7% (+ 1,458 bps improvement) reflects the net impact of the price increases implemented in prior quarters to mitigate the impact of inflation, impact of growth strategy on volumes as well as conversion cost-saving initiatives in the Animal Feeds segment.

Operating profit of ₦2 billion in Q4 2023 compared to ₦3.1 billion operating loss recorded in Q4 2022.

Operating expenses increased by 27.7% YoY to ₦5.9 billion from ₦4.6 billion in Q4 2022, reflective of broader inflationary pressures.

As a result, opex/sales ratio increased 120bps YoY from 14.7% in Q4 2022 to 15.9% in Q4 2023.

The Group recorded a Net finance income of ₦794 million in Q4 2023 compared to the Net finance cost of ₦269 million recorded in Q4 2022. Share of profit from associate companies increased to ₦235 million from ₦142 million reported in Q4 2022 reflecting the improved performance at MDS Logistics Limited.

Profit before tax of ₦3.1 billion (Q4 2022 Loss before tax: ₦3.3 billion). Excluding exceptional items profit before tax was ₦2 billion. Total profit for the quarter was ₦1.1 billion compared to ₦2 billion loss after tax in Q4 2022. EPS was 30 Kobo in Q4 2023 (Q4 2022: LPS 60 Kobo).