April 28, 2025/Cordros Report

NASCON Allied Industries Plc (NASCON) published their Q1-25 unaudited financials after market close on Friday, reporting an EPS of NGN3.74 (Q1-24: NGN1.86), following a sturdy growth in the topline (+77.2% y/y) and a decline in FX losses (-89.6% y/y).

Revenue grew by 77.2% y/y in Q1-24, attributed to (1) price increases across the company’s salt and seasoning products and (2) higher sales volumes, particularly from its Northern customer base. Regionally, the Northern market demonstrated strong performance, accounting for 78.0% of total revenue and expanding by 85.4% y/y. The Western (+49.7% y/y; 17.5% of revenue) and Eastern (+36.0% y/y; 4.5% of revenue) regions also delivered positive growth, albeit at a more moderate pace.

Despite the strong revenue growth, gross margin contracted by 448bps y/y to 42.8%, driven by a sharp 92.3% y/y increase in the cost of sales. The elevated cost of sales was primarily due to a rise in raw materials cost (+25.4% y/y | 89.5 % of cost of sales).  However, the significant 89.6% y/y reduction in FX losses provided essential support to the observed growth in bottom line, thus dampening the impact of rising operational expenses. As a result, EBITDA and EBIT margins expanded notably, increasing by 16.49ppts y/y and 17.38ppts y/y to 26.4% and 24.9%, respectively.

Further down, net finance income surged 13.6x y/y to NGN887.28 million (Q1-24: NGN60.80 million), driven by a 162.6% y/y increase in finance income. The higher finance income reflected a 162.5% y/y increase in short-term fixed deposits, which rose to NGN1.10 billion in Q1-25 from NGN418.73 million in Q1-24.

Overall, profit before tax grew significantly by 515.0% y/y to NGN11.31 billion (Q1-24: NGN1.84 billion). After accounting for a tax expense of NGN3.73 billion (+515.0% y/y), profit after tax settled at NGN7.58 billion, up from NGN1.23 billion in Q1-24.

Comment: NASCON’s strong Q1-25 performance signals the potential for an exceptional year, underpinned by strong revenue growth, margin expansion, and significantly higher profitability. The company’s ability to drive sales through strategic price increases and volume growth — particularly in their dominant Northern market — highlights its operational strength and market penetration. Thus, we maintain our positive outlook, expecting the resilience displayed in Q1-25 to continue supporting performance through 2025E. However, we note that persistent cost pressures, particularly around rising input costs, remain a key risk to margin stability. Our estimates are under review.