UAC Nigeria Posts Decline in Q1 Revenue on MDS Re-Classification
By Modupe Gbadeyanka
The financial results of UAC of Nigeria Plc for the period ended March 31, 2020 have been released by the board of the company.
Details of the financial status of the firm indicated that revenue depreciated by 2.9 percent year-on-year to N19.5 billion on the back of the re-classification of MDS as an associate.
In the results, adjusting for MDS in Q1 2019, revenue increased by 4.7 percent as a result of growth in the Packaged Food & Beverages (+9.8 percent YoY) from improved product availability, and Animal Feeds & Other Edibles segment (+2.4% YoY) from volume growth in poultry feeds.
In addition, EBIT declined by 34.5 percent to N1.1 billion in Q1 2020 with EBIT margin falling 2.78 percent YoY to 5.8 percent.
EBIT declined 22.9 percent and margins compressed 2.07 percent after adjusting for MDS in Q1 2019. EBIT was mainly impacted by investments made in marketing and distribution in the Animal Feeds & Other Edibles and Packaged Food & Beverages and Paints. Increased investments were also made to strengthen management teams across portfolio companies.
The finance income decreased in the period by 25.1 percent on account of lower investment income yields compared to prior year, while finance costs declined by 10.8 percent due to lower average interest rates.
Share of profit of associate stood at N71 million following reclassification of the logistics business (MDS) as an associate.
The company’s gross profit declined by 4.4 percent to N4.2 billion in Q1 2020, with gross margin declining marginally by 0.33 percent to 21.7 percent.
However, gross profit increased by 5.5 percent after adjusting for MDS in Q1 2019 with margins down 0.15 percent.
It was observed that Packaged Food & Beverages (+312 bps) and Paints (+269 bps) reported margin improvements on account of raw material cost savings and reduced material losses.
The decline in operating profit, coupled with a 30.7 percent decline in net finance income, resulted in a Profit Before Tax decline of 30.5 percent to N1.7 billion in Q1 2020, with Profit Before Tax margin declining by 3.38 percent to 8.5 percent.
Profit after tax from continuing operations declined by 41.6 percent to N1.1 billion, while earnings per share from continuing operations was 27 kobo, down 38.7 percent from 44 kobo inQ1 2019.
In addition, profit from discontinued operations was N0.72 billion due to a N3.1 billion fair value gain on recognition of MDS as an investment in associate which offset a N2.6 billion loss from UPDC.
Loss from UPDC was on account of impairment of its investment in the UPDC REIT, leaving the total profit for the period at N1.9 billion in Q1 2020, an 87.1 percent improvement from N996 million reported in Q1 2019.
Earnings per share for the period was 85 kobo, up 268.7 percent from 23 kobo in Q1 2019.
UAC Nigeria said its Free Cash Flow for the period was a negative -N5.6 billion in Q1 2020, compared with negative -B5.2 billion in FY 2019.
It explained that this was impacted by CAPEX of N2.0 billion from the Packaged Food & Beverages segment and inventory purchases in the Animal Feeds & Other Edibles segment.
Gearing increased 0.54 percent from FY 2019 to 10.2 percent at the end of the quarter on account of increased short-term debt funding in the Animal Feeds & Other Edibles segment.