Livestock Feed Exit: UACN Rationalises Portfolio to Boost Capital Efficiency
The N19.5 billion disposal marks another step in UACN’s portfolio rationalisation, with the potential to improve capital efficiency, simplify management focus, and sharpen the Group’s earnings profile.
UAC of Nigeria Plc’s portfolio optimisation programme has entered another important phase with its agreement to sell its 73.29% controlling interest in Livestock Feeds Plc to Sunbeth Treenuts and Sesame Limited for N19.5 billion.
The transaction, announced on 30 September 2026, values UACN’s controlling stake at approximately N19.5 billion, equivalent to N8.85 per Livestock Feeds share, and remains subject to the necessary regulatory approvals.
For UACN, this is more than a portfolio transaction. It is another indication that management is increasingly focused on where capital, management bandwidth, and balance-sheet capacity can generate the most attractive long-term returns.
Animal Feeds was historically one of UACN’s largest operating businesses by revenue. Before the acquisition and consolidation of C.H.I. Limited, the segment was particularly significant to the Group’s revenue base.
The economics, however, were considerably less attractive than the headline revenue suggested.
In FY2024, UACN’s Edibles and Feed segment generated N102.8 billion of revenue, representing about 52% of Group revenue of N196.9 billion. Yet its profit before tax was only N4.8 billion, compared with N6.6 billion for Packaged Food & Beverages despite the latter generating just N58.0 billion of revenue.
That contrast illustrates the central issue with the business: revenue scale did not necessarily translate into proportional earnings or capital efficiency.
The pressure became more visible in 2025. UACN reported Edibles and Feed revenue of approximately N91.6 billion, down 10.9% year on year, while the segment moved to an operating loss of N273 million and a N8.1 billion loss before tax. Management attributed the deterioration partly to the sharp decline in agricultural commodity prices, which left the business carrying higher-cost raw materials and resulted in an N4.1 billion inventory write-down.
The message for investors is straightforward with a large revenue contribution not necessarily synonymous with attractive value creation when margins are thin and working capital requirements are heavy.
UACN’s Animal Feeds portfolio comprises two businesses with Grand Cereals Limited, a private company in which UACN owns 71%, and Livestock Feeds Plc, a publicly listed company in which UACN owns 73.29%.
Livestock Feeds provides perhaps the clearest financial illustration of the capital intensity inherent in the business.
According to its audited FY2025 financial statements, Livestock Feeds generated N37.76 billion in revenue, but gross profit fell sharply to N2.33 billion, from N6.43 billion in 2024. Operating profit declined to only N374 million, from N4.70 billion.
More importantly, finance costs amounted to N3.24 billion versus N2.03 billion in 2024. The result was a N2.94 billion loss after tax, compared with a N1.93 billion profit in the previous year.
In other words, in 2025, Livestock Feeds generated operating profit, but finance costs were almost nine times operating profit. This is a useful illustration of how working-capital financing can absorb a significant portion of operating earnings in an agricultural-processing business.
The balance sheet provides further context. In December 2024, Livestock Feeds carried N19.33 billion of inventories and N13.71 billion of short-term borrowings. By December 2025, inventories had fallen substantially to N6.72 billion, while borrowings had been eliminated; however, trade and other payables rose to N8.71 billion and the company still reported a gearing ratio of 95% under its stated capital-management methodology.
This volatility reinforces the point: the feed business can generate meaningful revenue, but maintaining inventory, procuring raw materials, and financing the operating cycle can consume considerable capital.
What UACN is really selling?
Seen through a portfolio-management lens, UACN is not simply selling a profitable or unprofitable subsidiary. It is selling an asset whose capital requirements, earnings volatility, and management intensity may no longer fit the Group’s preferred portfolio configuration.
That distinction matters.
Livestock Feeds has demonstrated that the underlying business has value. In 2024, revenue increased by more than 100% to N41.67 billion, gross profit reached N6.43 billion, and profit before tax was N2.85 billion.
But 2025 showed how quickly the economics can reverse. Revenue declined to N37.76 billion, operating profit contracted to N374 million, and the company moved into a post-tax loss of nearly N3.0 billion.
That earnings volatility is important for a diversified holding company. Capital that must continually be committed to inventory and working capital has an opportunity cost: it can not simultaneously be deployed into businesses with stronger growth, margins, or returns.
The immediate financial benefit is the N19.5 billion cash consideration expected from the transaction, subject to completion.
The more important potential benefit, however, lies in what UACN does with the capital and what it removes from the Group’s future risk profile.
First, the transaction should reduce UACN’s exposure to the substantial working capital requirements associated with animal-feed manufacturing. Livestock Feeds’ financial statements explicitly identify working-capital funding as an area requiring treasury support, including finance costs paid to UACN in respect of funding provided to augment working-capital requirements
Second, the disposal should allow management to allocate greater attention to businesses where the Group sees stronger structural growth and return potential.
Third, it can improve capital efficiency. If a business consumes significant capital but produces relatively modest operating returns, removing it can improve the return profile of the remaining portfolio, particularly if the proceeds are redeployed into higher-return opportunities or used to strengthen the balance sheet.
Fourth, it can make the Group’s earnings architecture easier for investors to understand. UACN is increasingly being shaped around businesses such as Packaged Food & Beverages, Paints, Quick Service Restaurants, and its investment interests, following the enlarged contribution from C.H.I.
That portfolio is materially different from the UACN of several years ago. The strategic significance of the transaction may, therefore, be greater than the headline consideration.
UACN’s FY2025 results demonstrate the growing importance of its packaged food & and beverage operations. At the same time, the Group has continued to manage the consequences of a much larger balance sheet following the C.H.I. acquisition. Group revenue reached N340.5 billion in 2025, while operating profit increased to N28.5 billion. Against that backdrop, portfolio simplification becomes increasingly relevant.
A conglomerate creates value not merely by owning more businesses but by allocating capital and managerial resources efficiently across them. The Livestock Feeds disposal is, therefore, consistent with a broader question for investors: which businesses should UACN continue to own, fund, and manage directly, and which businesses may create more value outside the Group?
The answer will ultimately be visible in the numbers. The transaction itself should not be treated as the end of the value-creation story.
The N19.5 billion proceeds become economically meaningful only if UACN can deploy the capital at attractive returns, reduce expensive funding, strengthen liquidity, or invest behind businesses capable of generating superior cash returns. That makes capital allocation after completion an important investor-monitoring point.
If the proceeds are simply absorbed into general liquidity without improving earnings or returns, the strategic benefit will be less pronounced. If, however, UACN can convert the disposal proceeds into higher-return investments while simultaneously removing exposure to a working-capital-intensive business, the transaction could strengthen the Group’s overall capital-efficiency trajectory.
UACN’s agreement to sell Livestock Feeds represents another tangible step in the group’s ongoing portfolio optimisation.
The feed business remains economically relevant and has demonstrated periods of strong growth, but its financial profile also highlights the challenge of combining high revenue with thin and volatile margins, significant working-capital requirements, and elevated financing costs.
For UACN, the transaction potentially converts a capital-intensive controlling investment into N19.5 billion of cash while reducing exposure to the funding and operating-cycle demands of the business.
The broader investment thesis is, therefore, less about simply exiting animal feeds and more about moving capital towards businesses where UACN can generate stronger and more sustainable returns on invested capital.
In that sense, the Livestock Feeds disposal is another test of whether UACN’s portfolio optimisation strategy can translate from restructuring activity into measurable shareholder value creation. UACN – Equity Analysts Upgrade Target Price, Set 39 Upside
