UTC Nigeria plc, a company listed on the consumer goods section on the Daily Official list of the Nigerian Stock Exchange, has floundered and also failed to take advantage of Nigeria burgeoning middle class that crave for consumption, analysis of its third quarter 2013 results has shown.
For the first nine months through September 2013, the company posted a loss of N163.66m from N172.30m loss position recorded in the same period of the corresponding year (Q3) 2012. At the top line level, the company also under-performed as sales nose dived by 56 percent to N615.13m in Q3 2013 compared with N1.41 the preceding year.
The company has however refused to respond to email and phone calls made to it.
Analysts say the company is not tapping into the Nigeria rising population that falls between the ages of 18-26 and burgeoning middle class that crave for consumption.
These results also calls for urgent restructuring strategies by the management of UTC in order to reposition the company for better performance and also tapping into the opportunities that lies ahead of firms that operates in the consumer goods sector.
A recent report by McKinsey Global Institute (MGI), a global business and economics research organisation, in its May report projected that there would be an exponential rise in the country’s annual consumption from $388m to $1.4trn by 2030.
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It would be recalled that in company in its 2012 financial audited financial statement attributed the drop in sales to loss of production caused by two months loss in production resulting from the strategic move of its factory from Apapa to Ilupeju.
Further analysis of the third quarter financial results of UTC showed a better management of input costs as cost of sales reduced by 58 percent to N418.75m in the review period while cost of sales margin, which measures the relationship between cost of sales and sales, fell to 68.07 percent from 70.87 percent the preceding year.
Operating expense margin, a measure of efficiency of a firm moved to 63.70 percent as against 38.97 percent last year. It means that the company spent N0.63 on operating expenses to generate every one naira sales. Operating expenses were down by 29 percent to N391.79m.
Gross profits were down by 51.75 percent to N196.38m, from N407m last year which signifies a weak management of direct costs attributable to projects.
Despite the opportunities in the Nigeria economy, Fast Moving Consumable Goods firms like UTC have had growth hampered by the insecurity in the North part of the country that has prevented the firms operating in the sector from pushing their products to the crisis region.
Additionally, the devaluation of the country’s currency analysts say is making imports more expensive as most firms import raw material thus ballooning cost of production.
UTC Nigeria plc processes and markets meat and baked products. The Company’s products include fresh meats, sausages, hams, bacon, bread confectioneries and wrapped sausages.
The company’s share price closed at N0.50 on the floor of the NSE while market capitalisation was N616.70m.
