April 2, 2024/CSL Research

In its 2023 audited financial results, UAC of Nigeria Plc. (UACN) reported a 10.3%y/y growth in Revenue to N120.53bn from N109.27bn in FY 2022. The Animal Feeds and Other Edibles, Paints, Packaged Foods & Beverages, and the Quick Service Restaurants (QSR) revenue segments reported growth in sales to the tune of N64.17bn, N23.89bn, N28.55bn and N3.72bn in FY 2023 from N63.46bn, N19.21bn, N23.23bn and N3.08bn in FY 2022 respectively. However, Other Revenue declined to N205m in 2023 from N297m in 2022.

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The company’s Cost of Sales (adjusted for depreciation) was up 4.1% to N96.80bn from N92.95bn in 2022. Consequently, UACN reported Gross Profit of N23.73bn (+45.4% y/y) from N16.32bn in 2022 leading to a Gross profit margin of 19.7% in the period from 14.9% in 2023. The Total Operating Expense (adjusted for depreciation) for UACN increased by 31% y/y to N18.70bn in 2023 from N16.21bn in 2022 with the Administrative Expenses (adjusted for depreciation) advancing the most to N10.75bn (+30.9% y/y) in 2023 from N8.21bn in 2022. On the flip side, the Selling and Distribution Expenses (adjusted for depreciation) dropped marginally by 0.7% y/y to N7.95bn in 2023 from N8.00bn in 2022. Consequently, the company’s total opex margin came in at 15.5% in 2023 from 14.8% in 2022.

The company reported Impairment Loss on Assets of N861m in 2023 from N61m in 2022. Depreciation and Amortization grew by 24.0% y/y to N3.95bn from N3.18bn in 2022. Its Share of Profit from Associates grew to N860m (+731% y/y) in 2023 from N103m in 2022. Therefore, UACN reported an Operating profit of N1.08bn in 2023 from a Loss of N3.03bn in the prior year. Its Dividend Income and Other Operating Income appreciated to N52m and N8.82bn in 2023 from N9m and N743m in 2022. The company’s Other Operating Income grew significantly due to the N7.11bn in 2023 from N15.46m in 2022 by the profit on the sale of its Property, Plant and Equipment. This led to an exponential rise in UACN’s Earnings Before Tax (EBIT) to N9.95bn in 2023 from a loss of N2.28bn in 2022.

The company reported Finance Income of N5.95bn in 2023 compared with N1.45bn in 2022 which was largely driven by an exchange gain of N4.16bn in 2023 (due to the devaluation of the Naira against some FCY assets) from N326.52m in 2022. More so, UACN recorded total Interest Income gain of N1.78bn in 2023 (from N1.12bn in 2022) which contributed to the growth in the company’s Finance Income. On the other hand, its Finance Cost was flat at N3.56bn in 2023 compared with N3.53bn in 2022. Overall UACN’s Net finance Income settled at N2.39bn in 2023 from a cost of N2.09bn in 2022.

UACN reported Profit Before Minimum Tax of N12.34bn (+382% y/y from a Loss of N4.37bn in 2022) while reporting a minimum tax of N356m from N457m in 2022. This resulted in Profit after minimum tax of N11.98bn in 2023 from a loss of N4.82bn in 2022. The company reported Profit after tax for the year from continuing operations of N8.91bn in 2023 compared with a loss of N4.00bn in 2022 after accounting for income tax expense of N3.08bn in the period compared with a tax credit of N823m in 2022.

Our estimates and target price for UACN are under review. Current Price: N13.75/s.

Kindly click on the below link to download the full report.

​​​UACN FY 2023 Quick Take_.pdf​​​