CardinalStone Research
UAC of Nigeria Plc (UACN) has announced a 41.6% YoY contraction in profit from continuing operations to N1.1 billion in its Q1’20 unaudited results. The numbers also suggest that free cash flow slightly weakened from FY’19 levels.
Highlights
- Revenue declined by 2.9% YoY to N19.5 billion in Q1’20, driven by the reclassification of MDS as an associate. Notably, UACN divested control of MDS through the sale of 8.0% equity interest in the company (MDS) to Imperial Capital Limited in H2’19. Thus, UACN accounted for its investment in MDS using one-line consolidation (i.e. under “share of profit/loss from associates”). Ex MDS reclassification, revenue would have been 4.7% higher YoY in Q1’20
- According to management, improved product availability and higher volume growth in poultry feeds respectively supported revenue in the Packaged Food & Beverages (+9.8% YoY) and Animal Feeds & Other Edibles (+2.4% YoY) segments in Q1’20
- Operating profit declined by 34.5% YoY due to the knock-on effect of weaker top-line and a 14.0% YoY increase in operating expense to N3.2 billion. The increase in operating expenses was driven by investments in marketing and distribution in the Animal Feeds & Other Edibles, Packaged Food & Beverages, and Paints businesses. UACN also strengthened management teams across portfolio companies
- Free cash flow weakened to negative N5.6 billion in Q1’20 from negative N5.2 billion in FY’19, on account of an N2.0 billion capital expenditure in the Packaged Food & Beverages segment and inventory purchases in the Animal Feeds & Other Edibles segment
- UACN will have a teleconference call to jointly discuss the Q1’20 results and the audited FY’19 results on Thursday, 07 May 2020 at 3 pm West African Time (WAT)
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