UAC subsidiaries grow revenues by 612% on high demand

In the first half of 2024 (H1 2024), UAC Nigeria posted a net profit of N9.5 billion, which was a whopping 612 percent year-on-year growth from the N1.3 billion net profit recorded in H1 2023.

This is driven by increased demand for most of the UAC’s products, analysts say.

The group’s earnings during the half-year are projecting it to its best ever earnings in the 21st century. This has been helped by the impressive showing of some of its subsidiaries in 2024.

During the nine months ending September 30, 2024 (9M 2024), Livestock Feeds and Chemical and Allied Products, the two publicly listed subsidiaries of UAC Nigeria, posted their best-ever nine-month results. Livestock Feeds posted a net profit of N1.4 billion during 9M 2024, marking a whopping 3504 percent year-on-year growth from the N39.3 million net profit recorded by the company during the corresponding period in 2023. Local livestock products are currently in high demand due to the high cost of imported alternatives.

On the other hand, Chemical and Allied Products (CAP) Plc posted a nine months net profit of N2.6 billion, marking a 69 percent growth from the N1.6 billion net profit recorded in 9M 2023.

Going by UAC’s half-year results, one of the group’s most profitable subsidiaries, UAC Foods is also on track to record its best earnings yet. During the half-year, UAC Foods posted a pre-tax profit of N4.1 billion, contrasting with N1.3 billion recorded in H1 2023.

In 9M 2024, CAP Plc posted a revenue of N23.7 billion, marking a 55 percent year-on-year growth from N15.3 billion recorded in 9M 2023. The paint maker also recorded an operating profit of N2.8 billion which was 71 percent greater than the N1.7 billion recorded in 9M 2023.

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CAP’s operating margin during the nine months was 12 percent, in contrast with 11 percent recorded in 9M 2023. The company’s total assets also grew in 9M 2024 by 16 percent to N17.8 billion, from N15.4 billion at the start of the year. The company’s cash management strategy was also spotlighted by the growth in working capital to N6.5 billion, from N6.1 billion at the start of the year.

CAP Plc’s inventories grew by 69 percent to N8.5 billion, from N5 billion at the start of the year. The inventory growth was driven by an increase in its stock of raw materials during the year, with its raw materials inventory hitting N5.3 billion, from N2.1 billion at the start of the year.

Livestock Feeds, the other listed subsidiary, recorded a revenue of N28.6 billion in 9M 2024, a 100 percent increase from the N14.3 billion revenue posted in 9M 2023.

During the nine months, Livestock Feeds’ gross profit hit N4.7 billion, which was 384 percent year-on-year growth from the N969.2 million gross profit recorded in 9M 2023. The company’s operating profit also grew by 789 percent year-on-year to N3.4 billion during the nine months, from N384.6 million as of 9M 2023.

Livestock Feeds is a part of UAC Nigeria’s Edibles and Feeds division, alongside Grand Cereals Limited. That division is the highest revenue generator for UAC Foods. With Livestock Feeds generating more revenue than CAP Plc, the edibles and feeds division is on track to increase its share of revenue generation for the group.

However, Livestock Feeds Plc is a less profitable business than paint makers, chemical companies, and allied products. The company’s operating profit margin during the period was 12 percent just like CAP Plc.

In 9M 2024, the company’s working capital grew to N1.3 billion, from N101.8 million at the start of the year.

The performance by both companies is in line with the increased revenue and profit profile of UAC Foods is set to act as a push towards UAC’s best earnings yet under its major shareholder, Themis Capital Management. This year, UAC Foods has added to its service offerings with the introduction of Kingsway Pastry Roll, Kingsway Loaf, and Gala Chin Chin.