March 4, 2025/Cordros Report

NASCON Allied Industries Plc (NASCON) released its 2024FY audited results today, reporting a 11.4% y/y growth in full year EPS to NGN5.77 (2023FY: NGN5.18). The outturn was driven by the marked revenue growth (+48.9% y/y) recorded in the period. The company has announced a final dividend of NGN2.00/share, representing a dividend yield of 4.8% based on the closing price of NGN41.80/share (4 March).

Revenue grew by 48.9% y/y in 2024FY, driven by the growth from the Salt (+49.4% y/y | 93.8% of revenue) and Seasoning (+41.8% y/y | 6.2% of revenue) business segments. The Northern region (+50.6% y/y) remained NASCON’s core market with the highest revenue growth, with the Western (+44.4% y/y) and Eastern (+44.1% y/y) regions also sustaining their strong growth momentum. We attribute the revenue performance to strategic price increases across the company’s product portfolio as well as aggressive volume drive.

Gross margin declined by 871bps y/y to 46.1% due to the faster pace of growth in cost of sales (+77.7% y/y) to revenue growth (+48.9% y/y). The growth in the cost of sales was driven primarily by the 78.1% y/y increase in the cost of raw materials (86.2% of COGS) and Manufacturing expenses (+108.3% | 9.0% of COGS) reflecting higher commodity prices, weaker currency, higher energy prices amid the highly inflationary environment. Consequently, the EBITDA (-808bps y/y) and EBIT (-696bps y/y) margins contracted to 20.8% and 19.1%, respectively amid a 29.2% y/y increase in operating expenses.

The company recorded a net finance income of NGN613.26 million (vs a net finance cost of NGN507.81 million in 2023FY). The print was supported by a 93.4% y/y increase in interest income amid a 17.7% y/y decline in interest expenses (+106.6% y/y). We highlight that the decrease in finance costs was driven by a 22.7% y/y decline in interest on borrowings and a 5.0% y/y decline in interest on leases.

Overall, PBT rose by 14.9% y/y to NGN23.65 billion in 2024FY (2023FY: NGN20.59 billion). Following a tax expense of NGN8.07 billion, profit after tax (+13.5% y/y) printed NGN15.58 billion in 2024FY (2023FY: NGN13.73 billion).

Comment: NASCON sustained profitability and delivered earnings growth despite the challenging macroeconomic environment. We expect NASCON to remain profitable in 2025E, driven by robust revenue growth fueled by strategic pricing and volume expansion through market penetration efforts. Additionally, anticipated reduction in inflation and currency pressures are likely to enhance earnings growth, further solidifying the company’s financial performance. Our estimates are under review.