UACN 3.0: The odyssey of Nigeria’s oldest conglomerate

With a history of over 14 decades, UAC of Nigeria Plc (UACN) has been established as a behemoth in Nigerian business; weathering economic storms and adapting to changing market conditions.

From food and beverage to the economy’s paint, logistics, and real estate sectors, Nigeria’s oldest and one of the largest diversified conglomerates UACN – formerly a part of Unilever Plc. – has played an active role in Nigeria’s economic landscape since 1879 and maintained a track record of consistency over the years.

UACN is a listed conglomerate on the Nigerian Exchange Limited (NGX). It is a holding company with subsidiary and associate companies operating in the Animal Feeds and Other Edibles; Paints; Packaged Food and Beverages; Quick Service Restaurants; Logistics and Real Estate segments.

The conglomerate’s major operating platforms are edibles and feeds which consist of Grand Cereals Limited, manufacturers of Vital Poultry and Fish Feeds, Bingo Dog Food, Grand Maize Flour, Grand Cornflakes, and Grand Soya Oil, and then Livestock Feeds Plc, producers and distributes poultry feeds.

Paints consists of Chemical and Allied Products Plc, leading its industry segment with Dulux Paint while Packaged food and beverages consist of UAC Foods Limited, manufacturers of Gala Sausage Roll, Supreme Ice Cream, and Swan Natural Spring Water.

Its Quick Service Restaurants (QSR) covers UAC Restaurants Limited with its chain of Mr. Bigg’s and Debonairs Pizza outlets are one of its subsidiaries.

However, UAC owns minority stakes in Logistics and Real Estate businesses such as MDS Logistics Limited (43% ownership), a foremost integrated logistics company with investments in pharmaceutical distribution hubs in key locations across the country, and UAC Property Development Company PLC (UPDC), the first company in the real estate sector to be listed on the Nigerian Stock Exchange with 42.6% ownership.

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History and evolution

UACN was established in 1879 as a trading company but has evolved into a holding company owning businesses with manufacturing facilities across Nigeria.

The conglomerate’s early history commenced with the merger of four companies trading on the River Niger with the combined entity called the “Royal Niger Company” in 1880. However, Royal Niger’s charter was revoked and purchased by Lever Brothers in 1890 and its territories were transferred to the British government.

In 1920, The United Africa Company was formed by the joint agreements of the African and Eastern Trade Corporation and the Niger Company and was incorporated in 1931. By 1990, the company adopted the name “UAC of Nigeria Plc”, expanding via the acquisition of CAP plc, Grand Cereals Ltd, and other subsidiaries.

The journey by UACN to transition from a centrally-run conglomerate to a lean holding company was revealed in 2018 after establishing five subsidiaries and then two more in later years.

Financial performance

For over eight years, the Nigerian conglomerate’s financial situations were deteriorating due to the challenging economic environment caused by the rising cost of energy, and foreign exchange (FX) liquidity constraints, pressuring the cost of operations in its subsidiaries.

In 2018, UACN recorded a full-year after-tax loss of N9.6 billion from a profit of N962.8 million in 2017 due to incurred costs of N5.3 billion in operating activities and N2 billion in net finance costs.

By 2022, UACN’s operating loss was N1.3 billion full-year while loss before tax was N3.4 billion. The decrease was attributable to the poor performance in Animal Feeds and Other Edibles businesses, as well as increased operating expenses across all businesses particularly power costs and distribution costs.

The Group recorded higher net finance costs on account of higher interest rates, impacted by the 400bps increase in the monetary policy rate, and increased short-term borrowings in the Animal Feeds and Other Edibles, Paints and Packaged Food and Beverages segments.

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Investors and shareholders in Nigeria’s oldest conglomerate were eager to see management reverse the company’s fortunes, particularly since its struggling subsidiary, UACN Property Development Company (UPDC) plc, was still facing difficulties, and new challenges were arising.

Fortunately, the Nigerian conglomerate experienced its first-ever surge in after-tax profit in at least 12 years since it was listed on the Nigerian Exchange Limited (NGX). UACN’s after-tax profit surged by a 145 percent surge in after-tax profit to N16.9 billion compared to the N8.9 billion recorded at the end of 2023.

BusinessDay’s findings show that the increase in profitability was driven by higher earnings from the group’s subsidiaries and foreign exchange gains during operating activities.

The conglomerate navigated Nigeria’s foreign exchange crisis caused by the devaluation of naira by recording a 123.4 percent increase in foreign exchange gain to N9.4 billion from N4.2 billion in 2023.

UACN was also able to achieve that owing to its smart risk management methods regarding interest rates and foreign exchange and new initiative to pursue new markets through products offered to consumers.

“Our disciplined approach to financial management was instrumental in delivering these results. We maintained a strong focus on cost optimization, working capital efficiency, and prudent risk management, which supported both top-line growth and profitability,” Funke Ijaiya-Oladipo, group finance director said while speaking about UAC of Nigeria’s financial strategy.

“As we look ahead to 2025, we remain committed to driving sustainable growth through operational excellence, strategic capital allocation, and continued focus on delivering value to our shareholders,” she said.