July 31, 2024/CSL Research
In its H1 2024 earnings result, UAC of Nigeria Plc’s Revenue was up 57.5% y/y to N83.25bn from N52.87bn in H1 2023. On a q/q basis, Revenue increased by 49.0% to N42.70bn in Q2 2024 from N28.66bn in Q1 2024. This growth in revenue was driven by price increases across all product segments, while production volumes remained relatively stable. However, the company’s revenue segments had varied performance in H1 2024:
§ Animal Feeds & Other Edibles: Increased to N38.53bn, up 33.2% y/y.
§ Paints: Grew to N15.61bn, a rise of 59.7% y/y.
§ Packaged Foods: Surged to N27.57bn, an impressive 127.0% y/y increase.
§ Quick Service Restaurants (QSR): Down 23.9% y/y to N1.46bn
§ Other Services: Down by 34.5% y/y to N87.0bn
UACN reported an adjusted Cost of Sales of N63.20bn for H1 2024, marking a 46.5% increase from N63.20bn in H1 2023. This increase in costs resulted in a Gross Profit of N20.05bn for H1 2024, up from N9.73bn in the same period last year. Similarly, the company’s Gross Profit Margin increased to 24.1% in H1 2024 from 18.4% in H1 2024.
The company’s Operating Expenses, excluding depreciation, rose significantly to N11.98bn in H1 2024, compared to N8.31bn in H1 2024. This increase was driven by higher Selling and Distribution Expenses, which grew to N4.70bn from N3.77bn in H1 2024, and Administrative Expenses, which increased to N7.28bn from N4.54bn in H1 2024. UACN reported its Impairment Loss on Assets was down to N63m in H1 2024 from N71m in H1 2023.
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The company’s EBITDA increased to N8.01bn in H1 2024 up from N1.35bn in H1 2023 while its EBITDA margin increased to 9.6% in H1 2024 from 2.5% in H1 2023. The company’s Depreciation was higher at N2.16bn (+17.6% y/y) in H1 2024 from N1.84bn in H1 2023. Furthermore, UACN’s Share of Profit was slightly down by 1.2% to N475m in H1 2024 from N481m in H1 2023. Overall, the company’s Operating Profit increased significantly to N6.33bn in H1 2024 from a Loss of N7m in H1 2023.
The company’s Finance Income surged to N10.67bn in H1 2024 from N4.36bn in H1 2024 largely due to its FX gain of N9.37bn (+155.3% y/y from N3.67bn in H1 2023) on its FCY assets. Following suit, UACN’s Finance Cost of N2.85bn was +73.3% y/y higher than N1.64bn in H1 2023. This brought its Net Finance Income to N7.82bn in H1 2024 from N2.72bn in H1 2023. Its Dividend Income rose to N19m in H1 2024 (+9.5% y/y from N17m) while its Other Income also increased to N789m in H1 2024 (+81.0% y/y to N436m in H1 2023). Overall, this brought its Profit Before Tax to N14.95bn in H1 2024 from N3.16bn in H1 2023 while its Profit After Tax came in at N9.54bn in H1 2024 from N1.23bn in H1 2023.
We have a Buy recommendation on UACN with a target price of N19.42/s. Current Price: N16.85/s.
UACN H1 2024 Quick Take.pdf
