UAC of Nigeria has declared its first loss after tax in six years due to pressures from lower sales and higher operating expenses.
Data sourced from the firm’s financials showed UACN reported N1.16 billion loss after tax in the three months of 2023 compared to a profit of N638.75 million in the corresponding period of 2022.
Findings showed UACN recorded an 11 percent drop in revenue to N24.62 billion from N27.67 billion in the first three months of 2022, on the back of a challenging operating environment during the period.
The firm’s 11 percent drop in revenue was a result of lower volumes from the cash crunch, which led to animal feeds (-10.2%), packaged foods and beverages (-17.3%) and paint (-14.7%) segments.
UAC of Nigeria’s operating expenses amounted to N4.16 billion in the first quarter of 2023, up 13.4 percent from N3.67 billion in the first quarter of 2022.
Selling and distribution expenses stood at N1.97 billion in the first quarter of 2023, 13 percent increase from N1.74 billion in the same quarter of the preceding year.
The firm’s administrative expenses amounted to N2.19 billion in the first quarter of 2023, 13.5 percent increase from N1.93 billion in the same period of the previous year.
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The firm’s gross profit dropped 35.4 percent to N3.28 billion from N5.08 billion in the comparable periods.
Consequently, gross profit margin amounted to 13.3 percent in the first quarter of 2023, 500 basis points decrease from 18.3 percent in the first quarter of 2022.
UAC of Nigeria said in a note that the gross margin compressed was impacted by lower sales and rising costs, particularly power.
The firm recorded an operating loss of N700.26 million in the first three months of 2023 from an operating profit of N1.87 billion in the first three months of 2022.
UAC of Nigeria said in its earning release statement that the operating loss was impacted by N832 million operating loss from the animal feeds and other edibles segment, constraining demand as customers prioritised essential spending because of cash shortages.
Similarly, the firm also reported disruption in trading and distribution during the general elections in February 2023 which impacted operating loss in the first quarter.
In Q1 2022, the firm said the holding company recognized a one-off gain on disposal of non-core property (N386 million) which impacted year-on-year comparison and led to an operating loss.
Commenting on the results, Fola Aiyesimoju, group managing director said “In Q4 2022, we recorded operating losses and loss before tax of N3.1 billion and N3.3 billion respectively. Although still challenging, these improved to N700 million and N937 million in Q1 2023.
“The performance this quarter would have been stronger but for challenging macro-economic and sociopolitical challenges. Factors that adversely impacted performance were cash shortages and lost trading days on account of elections.
“Quarter on Quarter improvement was on account of improved performance in our animal feeds businesses and our packaged food and beverages business,” he said.
The firm’s cash and cash equivalents at the end of the period amounted to N13.42 billion in the first quarter of 2023, indicating a 6.3 percent increase from N12.63 billion in the first quarter of 2022.
UAC of Nigeria recorded a loss per share of 29 kobo per share from 18 kobo per share in the comparable periods.