UAC of Nigeria Plc has reported a pre-tax profit of N9.030 billion for the Q1 ended March 31, 2024, representing 1,064% year-on-year (YoY) increase.
According to the company’s unaudited condensed consolidated financial statements for 2024 Q1, UACN reported an impressive revenue of N40.556 billion, marking 64.73% increase from the N24.620 billion reported the year prior. This revenue also represents 34% of the total revenue generated in 2023.
Key highlights (Q1 2024 vs Q1 2023)
- Revenue: N40.556 billion +64.73% YoY
- Cost of sales: N31.462 billion +47.42% YoY
- Gross profit: N9.094 billion +177.37% YoY
- Selling and Distribution expenses: N2.542 billion +29.08% YoY
- Admin expenses: N3.431 billion +56.81% YoY
- Operating profit: N3.401 billion +585.71% YoY
- Foreign exchange gain: N5.916 billion +8,190.15% YoY
- Finance cost: N1.374 billion +107.51% YoY
- Profit after tax: N5.918 billion +610.59% YoY
- Earnings per share: N1.85 +737.93% YoY
Commentary
- Looking at the revenue composition reveals diversification, with 47.34% from animal feeds, 29.24% from packaged foods and beverages, and 20.46% from paints.
- This diversified revenue stream across multiple segments can help enhance stability and resilience against market fluctuations and risks associated with over-reliance on any single product or market.
- Furthermore, the revenue growth of 65%, surpassing the 47% growth in the cost of sales, along with a substantial increase in foreign exchange gain, can be credited for the impressive performance of the bottom line.
- However, the company continues to grapple with high distribution and administrative expenses, as well as escalating interest expenses, which surged by 108% year-over-year to reach N1.374 billion.
The operating profit margin of 8.39% indeed reflects the significant impact of these costs on the operation profit. This highlights the importance of giving focused attention and employing strategic management practices to mitigate these adverse effects on the company’s financial performance.
Despite these challenges, the positive aspect is that the company appears poised to sustain the profitability it recorded in 2023 after experiencing a loss in 2022. The profit after tax for Q1 represents about 66% of the profit after tax recorded in 2023.
This solid start to the year and the indication of the company’s resilience and ability to sustain its profitability trajectory seem to have been reflected in the share price.
The stock gained 8.87% from its last closing price on April 26, 2024, suggesting that investors perceive the company’s performance positively and anticipate continued growth and profitability.
It is therefore crucial for the company to continue implementing effective strategies to manage costs, enhance operational efficiency, and adapt to market dynamics to maintain and improve its financial performance in the future.
Recommended reading: UACN transition from loss to profitability: Can it be sustained?
