UACN Returns to Profitability with FX Gain

In 2023, UAC of Nigeria PLC returned to profitability following positive impacts of exchange rate movements on the consumer goods company earnings.

In its audited financial statement, UACN posted a net profit of N8.9 billion, reversing a previous net loss of N4.0 billion in 2022.

This positive return stemmed largely from N4.2 billion in foreign exchange gains, which were realized from interest on foreign cash deposits of $13.0 million, Cardinalstone said in an update.

Analysts said for context, management reported an effective deposit closing rate of N907.1/$ as of 31 December 2023 as against N461.50/$ as of 31 December 2022.

 Details showed that the company revenue increased by 10.3% year on year to N120.5 billion.

The large revenue posted by the consumer goods company was aided by a mix of volume growth and price increases across all business segments. Listed Banks Need N2.8 trillion to Meet New Capital Base

Revenue from the paints segment increased by 24.4%, Packaged Food & Beverage sales popped higher by 23.0% and, Quick Service Restaurant advanced by +20.8% while Animal Feeds & Other Edibles saw a surge of 1.52% year on year.

Analysts stated that the company’s revenue growth masked the marginal growth in the cost of sales, which moderated on the back of cost-saving initiatives implemented at the company’s animal feed and other edible segments.

 Thus, the gross margin expanded by 4.7 ppts to 17.7%. Additionally, the company reported a significant surge in gains from the sale of property, plant and equipment worth N7.1 billion.

This represents a multiple-fold growth when compared with N15.5 million achieved in 2022.

According to Cardinalstone, the share of profits from associates – UPDC and MDS logistics surged 8.3x to N860 million on the back of an expansion of MDS’ transport business.

Consequently, earnings before interest and tax came in higher at N9.1 billion with an operating profit margin of 7.5%

Overall, the result translated to an EPS of N3.1 as against N1.1 loss per share posted in the comparable year in 2022.

The company profitability ratios ROE and ROA settled at 16.8% and 7.9%, respectively. The board of directors proposed 22 kobo as a dividend despite a good year. Last year, the same amount was paid to shareholders even though it posted a loss.

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