NASCON Allied Industries Plc, a subsidiary of Dangote Industries Limited, recorded a drop in its branding expenses decreased by 6% to ₦527.9 million from ₦562.9 million in 2019, according to the financial statement ended December 2020.
This is largely due to a significant reduction in in-market consumer engagements largely driven by the restrictions on large gatherings in the markets across the country.
However, NASCON’s Market Activation expenses increased by 39% to ₦0.37bn {2019: ₦0.27bn} as a result of targeted market activations and penetration to mitigate the market disruptions caused by the COVID-19 pandemic.
According to the report, delivery expenses for the year increased by 2% to ₦4.90bn {2019: ₦4.79bn in COGS} mainly driven by additional hiring of third party transporters to mitigate the effect of non-operational trucks and infrastructure challenges in Nigeria while ensuring timely delivery of all our products.
Administrative expenses increased by 17% to ₦2.39bn {2019: ₦2.04bn} mainly driven by increased employee costs and additional staff bus rentals. The Staff bus rentals were essential in ensuring the safety of our staff during this COVID-19 pandemic.
Other Key financial highlights
- Profit After Tax increased by 46% to ₦2.69bn for the year, compared to ₦1.85bn in 2019.
- Further analysis by Brand Spur revealed that the NASCON’s salt revenue increased by 35% to ₦25.34bn {2019: ₦18.84bn} and contributed 90% of total revenue while Seasoning contributed 10%.
- Seasoning revenue decreased by 7% to ₦2.67bn {2019: ₦2.86bn} mainly driven by trade disruptions in the market due to the COVID-19 pandemic.
- Operating profit for the year increased by 39% to ₦4.03bn {2019: ₦2.90bn} and operating margin for the year was 14% {2019: 11%}. The main driver for the increase in 2020 was the Vegetable Oil profitability loss of ₦1.53bn in 2019 which did not reoccur in 2020.
- Earnings per share also increased to ₦1.02 in 2020 compared to ₦0.70 in 2019.
- Combined production efficiency for the year was 79% {2019: 80%}. Salt efficiency in all 3 plants (Oregun, Apapa and Port-Harcourt) reduced slightly to 80% {2019: 84%}. Seasoning efficiency decreased to 42% {2019: 66%} due to increased cubing capacity in the year. There was no production of Vegetable Oil and Tomato Paste in the year.
- Cost of Sales for the year decreased by 24% to ₦16.45bn {2019: ₦21.65bn} driven by an increase in Salt ₦2.12bn and decreases in Vegetable Oil ₦2.60bn and Freight (delivery) ₦3.52bn. Vegetable Oil decrease was as a result of nonproduction of products in the year while Freight (delivery) expenses are reflected in Distribution expenses.
- Direct material costs decreased by 3% compared to 2019 jointly due to increased global freight costs for Salt and decreased raw material purchases of Vegetable Oil. Depreciation decreased by 63% while Direct Labour decreased by 12% both due to reclassification of Freight (delivery) expenses.
- Investment income decreased by 44% to ₦0.05bn {2019: ₦0.09bn} as we focused our resources on investing in the new Salt refinery plant to optimize the refined salt capacity. Finance costs for the year was ₦0.17bn {2019: ₦0.22bn} driven mainly by ₦0.11bn interest on borrowings related to specific borrowings for capital projects. The average effective interest rate during the year was 9%.
- Tax expense for the year increased by 32% to ₦1.22bn {2019: ₦0.92bn}, including a deferred tax expense of ₦0.36bn {2019: ₦0.03bn}. The effective tax rate was 31% {2019: 33%}.
- Total assets increased by 15% to ₦44.31bn {2019: ₦38.67bn}. This increase was driven predominantly by an increase in trade and other receivables, inventories and other assets. Cash and bank for the year decreased by 29% compared to the prior year to ₦2.60bn {2019: ₦3.66bn}.
- Total liabilities increased by 15% to ₦31.59bn {2019: ₦27.58bn} primarily driven by an increase in trade and other payables and a decrease in borrowings.
- Borrowings for the year decreased by ₦3.30bn relating to the repayment of specific borrowings for capital projects in 2019. Total equity increased year on year by 15% to ₦12.72bn {2019: ₦11.09bn}.
Proposed dividend
On Thursday 25th of February, 2021, the Directors proposed to maintain the dividend of ₦0.40 per share {2019: ₦0.40} to be paid to shareholders on Monday 31st of May, 2021.
The dividend represents a payout ratio of 39.2% {2019: 57.1%} reduced due to capital expenditure requirements in 2021. If approved, the total amount payable will be ₦1.06bn {2019: ₦1.06bn}.