UAC of Nigeria PLC (UACN) recently released its 2025 results, and while the numbers might raise some eyebrows, a 71% drop in profit before tax and EPS falling to 29 kobo, the story is far from over.
Beneath the surface lies a strategic acquisition that could reshape the company’s future: the acquisition of CHI Limited.
In the final quarter of 2025, UACN completed the acquisition of CHI Limited, a leader in Nigeria’s packaged food and beverage sector.
With iconic brands like Hollandia and Chivita now under its belt, UACN has greatly strengthened its position in the rapidly growing food and beverage market. Group Managing Director Mr. Fola Aiyesimoju stated,
“The acquisition of C.H.I. Limited has significantly broadened UACN’s operating base, adding leading consumer brands such as Chivita, Hollandia, and Capri-Sun, while SuperBite and Beefie have further strengthened the Group’s snacks portfolio. The transaction has also deepened leadership and operational capacity across the Group.”
The Good and Bad of the Acquisition
The acquisition came with a hefty price tag of N182.4 billion, and as with any major transaction, there are growing pains. The immediate result of this acquisition was a surge in revenue.
- The Packaged Food & Beverages segment jumped by 252.45% to N204.54 billion, contributing 60% of total revenue in 2025, compared to 29% in 2024.
- However, it’s not all smooth sailing. With such a large acquisition came substantial debt and interest expenses, which pushed UACN’s profit before tax down by 71%.
- The EPS dropped to just 29 kobo, signaling that while the company is growing, it’s also feeling the pressure of financing such a large deal.
- Similarly, the interest coverage ratio, which measures a company’s ability to cover interest payments from its operating profit, slipped from 3x in 2024 to just 1.1x in 2025, indicating that servicing the debt has become more challenging.
That said, UACN’s operating profit remained strong enough to absorb the additional interest costs.
At both the top and mid-levels, profit growth showed resilience. While gross profit grew by 64%, operating profit still increased by 14%, demonstrating the company’s ability to maintain profitability despite rising financial pressure.
- This shows that the core business is solid, and the acquisition is likely to pay off in the future.
- Furthermore, the company has lined up a long-term refinancing strategy, including a 7-year Naira loan and a N150 billion bond program, which should ease the financial strain moving forward.
For Investors: Patience is key
UACN appears to be in a transition phase, dealing with the short-term fallout of its bold acquisition of CHI Limited.
However, there are reasons for optimism. With EPS at 29 kobo and the current market price, UACN’s valuation might seem overstretched at first glance.
The acquisition may have stretched the company’s finances in 2025, but it could turn out to be a strategic move that yields significant rewards in the long run. As Mr. Aiyesimoju noted,
- “2025 was a pivotal year for UACN. The acquisition of C.H.I. Limited significantly expanded our portfolio, strengthening both our market position and earnings base.
- Looking ahead to 2026, we are well-positioned to unlock value from this expanded portfolio and deliver long-term value to shareholders.”
That is good, but moving forward, in addition, the company must tackle its overhead expenses, which consumed over 76% of gross profit in 2025.
- This means that for every N100 in revenue, only N6 was left after covering these costs.
- This is a significant challenge that must be addressed as part of UACN’s strategy for sustainable growth and return to shareholders.
While UACN has been consistent in dividend payments, looking at 2025 performance suggests that the company may prioritize growth and sustenance over immediate returns to shareholders.
Last year, the stock gained 189% YtD, closing at N91, and so far in 2026, it has moved up to N92.30, reflecting a 1.43% YtD gain.
How it performs going forward will depend on subsequent quarterly results and the successful integration of CHI Limited.
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