Last week, the Nigerian Stock Exchange (NSE) published the full year results of UAC of Nigeria plc (UACN) which showed decline from top-to-bottom line figures.
UAC of Nigeria plc is a leading diversified company, operating in the food and beverages, real estate, paint and logistics sectors of the economy.
The group’s full numbers
The group results at the Nigerian bourse show revenue was down by 15 percent to N73.145billion from N85.654billion in 2014. The group’s operating profit before impairment declined by 39percent to N7.60 billion from N12.39billion in 2014.
Profit before tax from continuing operations declined by 44 percent to N7.943billion from N14.096billion in 2014. UACN group profit for the year 2015 declined by 53 percent to N5.184billion from N10.944billion in 2014.
Basic earnings per share (kobo) declined to 156kobo from 340kobo. The company proposed 100kobo dividend per share against 175kobo in 2014. The group’s market capitalisation as at December 31, 2015 stood at N36.016billion, from a high of N65.309billion in 2014.
UAC of Nigeria plc consolidated and separate statement of profit or loss and other comprehensive income for the year ended December 31, 2015 showed that selling and distribution expenses declined to N3.318billion from N3.628billion in 2014.
Gross profit was also down to N16.565billion from N19.182billion in 2014. Administrative expenses rose to N6.881billion from N6.550billion in 2014. Finance income declined to N1.566billion from N1.745billion.
The company’s finance cost which is the cost and interest and other charges involved in the borrowing of money to build or purchase assets declined to N3.017billion from N3.020billion. The share of net profit of UACN associates and joint venture using the equity method dropped to N1.787billion from N2.978billion.
About UACN
The Company’s brand portfolio includes leading brands such as Gala Sausage Roll, Mr Biggs, Snaps, Funtime Coconut Chips, Supreme Ice cream, Delite Fruit Juice, Swan Natural Spring Water, Gossy Warm Spring Water, Dulux, Grand Soya Oil and Grand Groundnut Oil, Vital Feeds, Livestock Feeds and Sandtex.
UAC has evolved into a Holding Company with strong regional and international partnerships in a bid to enhance sustainable growth.
The partnerships are: UAC Foods Limited a business partnership between Tiger Brands Limited holding 49 percent of the equity and UAC controlling 51percent; MDS Logistics Limited, a joint venture with Imperial Logistics, which holds 49 percent equity with UAC holding the majority stake of 51percent; UAC Restaurants Limited, where Famous Brands holds 49percent of the equity, while UAC holds the remaining 51 percent.
UAC also operates successful joint ventures in the real estate business and technical collaboration in its paint business. The company blazed the trail by fully franchising its Quick Service Restaurants operations, a strategy that is serving as a model for the sector, and has been replicated by competition. Gala Sausage Roll and Mr Bigg’s, the leading QSR brand in Nigeria, have for many years remained dominant household brands.
UACN’s business portfolio includes the following Companies: UACN Property Development Company Plc (UPDC) –quoted on the Nigerian Stock Exchange; UAC Foods Limited, which produces Gala Sausage Roll, Delite Fruit Juice, Supreme Ice Cream and SWAN Natural Spring Water; MDS Logistics Limited, a foremost integrated logistics company with investments in the development of pharmaceutical distribution hubs in key locations across the country; UAC Restaurants Limited, with its growing chain of Mr Bigg’s outlets; Grand Cereals Limited, which manufactures Vital feeds, Grand Maize Flour and Grand Oil brands; Chemical and Allied Products Plc (CAP Plc), leading its industry segment with Dulux paint and Warm Spring Waters Nigeria Limited, manufacturer of “GOSSY” Spring Water and UNICO CPFA Limited, a Closed Pension Fund Administrator.
The Company’s business expansion drive has led to acquisition of 51percent equity in Livestock Feeds Plc, foremost manufacturers of poultry feeds and 51percent equity stake in Portland Paints and Products Nigeria Plc, makers of Sandtex paint. These acquisitions have deepened the Company’s play in the paints and feeds markets.
Analyst reaction to UACN results
Uwadiae Osadiaye team of analysts at Lagos-based FBNQuest said in their first reaction to UAC of Nigeria plc financial statements for the year ended December 31, 2015 said that they expect to see slight downward revisions to consensus 2016 earnings per share (EPS).
“UACN’s full year 2015 PBT of N7.9billion came in ahead of consensus full year forecast of N5.7billion. Again, we believe the numbers were helped by the write-back of N2billion, implying that the underlying performance was soft. Given this, we expect slight downward adjustments to consensus 2016 estimates. We expect the market to react negatively to these numbers and expect a possible sell-off in UACN shares in the short term,” FBNQuest analysts added.
They further said that, “At current levels, on our published estimates, UACN shares are trading on a 2016E P/E multiple of 8.6x for 13percent EPS growth in 2017E. Year-to-date, UACN shares have declined -1.3percent outperforming the NSE ASI which has shed -11.2percent. We rate the shares outperform. Our estimates are under review.”
“UACN proposed a dividend per share of N1 (versus our 71kobo forecast) implying a dividend yield of 5percent. In terms of the segmental drivers behind the y/y topline decline, sales for UACN-(ex-Paints and real estate), our proxy for UACN’s food business, declined by 20percent y/y to N15.3bn in Q4. UACN’s real estate subsidiary also saw sales decline by -77% year-on-year (y/y) to N814million while sales for CAP were up by just 1percent year-on-year (y/y) which resulted in a full year y/y growth of similar magnitude. CAP’s full year 2015 y/y growth compares with a five year average growth of around 17percent,” Osadiaye team of analysts at Lagos-based FBNQuest stated.
Iheanyi Nwachukwu
