Economy
UAC Nigeria’s Strategy to Invest for Growth Yields Results in Q3
By Dipo Olowookere
Though the nine months results of UAC Nigeria Plc were not too impressive, its third-quarter earnings were better and this was because of the decision of the company to invest for growth and free up its burden.
In Q3 of 2020, the revenue jerked by 10.5 per cent to N21.2 billion from N19.2 billion in Q3 2019 compared with the meagre 1.7 per cent rise in nine months of 2020 N57.8 billion from N56.8 billion achieved in the same period of last year.
The Q3 growth in turnover was as a result of revenue growth across all operating segments (Animal Feeds & Other Edibles +10 per cent, Paints +18 per cent, Packaged Food and Beverages +8 per cent, and Quick Service Restaurants +16 per cent).
Volume growth in the fish feed and cereals categories, as well as, price increases across major categories to offset rising raw material costs contributed to topline growth in the Animal Feeds & Other Edibles segment.
Paints sales rebounded strongly following the easing of COVID-19-related restrictions, growing 18 per cent compared to the same quarter last year as a result of strong volume growth across the portfolio.
The Packaged Food and Beverages segment achieved growth in key categories i.e snacks, dairy, and water. Quick Service Restaurants revenue growth was primarily driven by sales from the recently launched company-owned restaurant.
In the third quarter of the year, when the lockdown in Nigeria was eased, the earnings before interest and taxes (EBIT) declined 23.7 per cent to N1.2 billion in Q3 2020, however, adjusting for non-recurring and non-operating income in Q3 2019 (profit from the sale of non-core real estate N631.3 million and write back of statute-barred unclaimed dividend N206.3 million), underlying EBIT increased 65.1 per cent year-on-year and EBIT margin increased 186bps to 5.6 per cent.
A key contributor to the improvement in underlying EBIT was the 642.5 per cent YoY increase in Animal Feeds & Other Edibles operating profit in Q3 2020.
In the third quarter of the year, the profit before tax reduced by 24.7 per cent to N1.4 billion from N1.9 billion, while the nine months pre-tax profit shed 58.8 per cent to N2.5 billion from N6.0 billion.
Business Post reports that the profit after tax from continuing operations rose by 8.1 per cent to N1.2 billion from N1.1 billion in Q3 2019, but dropped 67.0 per cent in nine months to N1.5 billion from N4.4 billion.
A N493 million loss from discontinued operations was recognised in Q3 2020 attributable to UPDC versus the N14.0 billion loss recorded in Q3 2019. As a result, UAC Nigeria’s total profit for the period was N743 million in Q3 2020, a reversal from the N12.9 billion loss reported in Q3 2019, while the earnings per share (EPS) for the period was 15 kobo, up from negative 274 kobo in Q3 2019.
“Our strategy to invest for growth yielded encouraging results in the third quarter with consolidated revenues, gross profit and operating profit (excluding non-recurring items) growing 11 per cent, 20 per cent and 65 per cent respectively,” the Group Managing Director, Folasope Aiyesimoju, stated.
“We recorded topline growth across all our continued operations in the quarter. We are focused on strategies to mitigate the impact of a challenging foreign exchange environment and managing the recent trend of cost escalation.
“We expect to complete the sale of a controlling interest in UACN Property Development Company PLC to Custodian Investment PLC and are supportive of the recently announced merger between Chemical and Allied Products PLC and Portland Paints and Products Nigeria PLC,” the company’s chief said.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange weakened by 0.22 per cent on Tuesday, April 28, with the market capitalisation down by N4.8 billion to N2.420 trillion from N2.425 trillion, and the NASD Unlisted Security Index (NSI) down by 9.01 points to 4,044.96 points from 4,053.97 points.
During the session, the price of Central Securities Clearing System (CSCS) Plc went down by N1.82 to N767.05 per share from N78.87 per share, while FrieslandCampina Wamco Nigeria Plc appreciated by N1.90 to N100.00 per unit from N98.10 per unit.
According to data, the value of trades increased by 265.7 per cent to N27.1 million from N7.4 million units, and the volume of transactions surged by 305.2 per cent to 1.3 million units from 319,831 units, while the number of deals decreased by 6.9 per cent to 27 deals from 29 deals.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with the sale of 3.4 billion units valued at N8.4 billion, followed by CSCS Plc with 59.8 million units exchanged for N4.0 billion, and Okitipupa Plc with 27.8 million units traded for N1.9 billion.
GNI Plc also finished as the most traded stock by volume on a year-to-date basis, with a turnover of 3.4 billion units worth N8.4 billion, trailed by Resourcery Plc with 1.1 billion units transacted for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units sold for N1.2 billion.
By Adedapo Adesanya
Pressure is beginning to mount on the Nigerian Naira in the different segments of the foreign exchange (FX) market despite an oil windfall triggered by the Middle East crisis.
On Monday, April 27, the domestic currency further weakened against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) by N16.47 or 1.2 per cent to N1,380.71/$1 from the previous day’s N1,364.24/$1.
It was not different against the Pound Sterling in the same market window, as it lost N16.04 to trade at N1,863.76/£1 versus Monday’s closing rate of N1,847.72/£1, and against the Euro, it slipped by N12.72 to close at N1,615.01/€1 versus N1,602.29/€1.
The Naira also depreciated against the Dollar at the black market yesterday by N5 to quote at N1,390/$1 compared with the previous price of N1,385, and at the GTBank forex counter, it further crashed by N9 to settle at N1,379/$1 compared with the preceding session’s N1,370/$1.
The continued decline of the Naira comes as traders increasingly seek other safe-haven currencies amid continued global disruptions.
The benefit awash in the global market is making foreign portfolio investors stay short in Nigerian markets. Despite this, the daily FX publication released showed that interbank turnover rose to $98.829 million across 78 deals, up from $76.65 million.
Meanwhile, the cryptocurrency market remained cautious, with Bitcoin (BTC) trading at $77,216.66 despite surging oil prices and geopolitical tensions over a potential extended US naval blockade of the Strait of Hormuz.
Analysts say the supply overhang has finally dried up, and the sellers who were spooked by macro shifts or quantum fears have already exited, leaving the market much thinner on the sell-side.
Investors will await decisions made by central banks this week. The US Federal Reserve will announce its rate decision later on Wednesday, while the European Central Bank (ECB) follows on Thursday.
Ethereum (ETH) gained 1.5 per cent to trade at $2,324.59, Dogecoin (DOGE) chalked up 1.4 per cent to sell for $0.1016, Solana (SOL) appreciated by 0.6 per cent to $84.85, Cardano (ADA) grew by 0.5 per cent to $0.2483, and Binance Coin (BNB) advanced by 0.2 per cent to $627.15.
However, TRON (TRX) depreciated by 0.6 per cent to $0.3224, and Ripple (XRP) lost 0.03 per cent to sell at $1.39, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) were unchanged at $1.00 each.
By Adedapo Adesanya
Oil was up by nearly 3 per cent on Tuesday as persistent worries about supply constraints from the closed Strait of Hormuz continued, with Brent futures for June rising by $3.03 or 2.8 per cent to $111.26 a barrel, and the US West Texas Intermediate (WTI) crude futures growing by $3.56 or 3.7 per cent to $99.93 a barrel.
An earlier round of negotiations between the United States and Iran collapsed last week after face-to-face talks failed.
Ship-tracking data showed significant disruptions in the region, with six Iranian oil tankers forced to turn back due to the US blockade, but some traffic is still moving.
Prices trimmed some of the advances after the United Arab Emirates (UAE), the fourth-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC), said on Tuesday it would exit the group on this Friday, May 1, 2026.
This dealt a blow to the oil-exporting group and its de facto leader, Saudi Arabia.
The UAE could quickly add between 1 million and 1.5 million barrels per day of output. However, with the Strait of Hormuz effectively closed, analysts said that there’s nowhere for that supply to go.
The UAE joined OPEC in 1967, but tension with Saudi Arabia over production quotas has been building for years.
Under the OPEC+ deal, the country has been held to roughly 3 million barrels per day while sitting on capacity above 4 million. It has been pushing toward 5 million barrels per day by 2027, and that target is hard to achieve with quotas built around someone else’s view of the market.
The war in Yemen broke whatever was left of diplomatic patience.
President Donald Trump said he was unhappy with the latest Iranian proposal to end the war. The proposal would avoid addressing the nuclear programme until hostilities cease and Gulf shipping disputes are resolved.
The Idemitsu Maru, a Panama-flagged tanker carrying 2 million barrels of Saudi oil, and an LNG tanker managed by the Abu Dhabi National Oil Company (ADNOC) crossed the Strait on Tuesday, shipping data showed.
Vortexa data showed that the amount of crude oil held around the world on tankers that have been stationary for at least seven days rose to 153.11 million barrels as of April 24.
The American Petroleum Institute (API) estimated that crude oil inventories in the United States fell by 1.79 million barrels in the week ending April 24. The official data from the US Energy Information Administration (EIA) will be released later on Wednesday.
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