UAC of Nigeria Plc (NGX: UACN) grew its revenue 11.9% in the first half of the year compared to the same period last year.
Despite the rise in revenue, UACN reported a loss of N715.99 million for the period ended 30 June 22 against a profit N762.62 million recorded in H1 2021.
Revenue in H1 2022 increased 11.9% YoY to ₦52 billion supported by sales growth across all operating segments.
Animal Feeds and Other Edibles segment (+7.6% YoY) driven by price increases to offset rising raw material costs. Paints segment(+28.8% YoY) on account of price increases and retail footprint expansion. Packaged Food and Beverages segment (+6.3% YoY) driven by price increase in the snack category, improvement in production efficiency in the water category and improved distribution in the dairies category; and the Quick Service Restaurants segment (+28.2% YoY) driven by additions to company-owned restaurants (corporate stores) and growth in logistics sales.
Gross profit in H1 2022 increased by 7.4% YoY to ₦8.9 billion, however gross profit margin contracted by 73 basis points to 17.2%. Margin contraction was largely on account of input cost escalation across all businesses.
Operating profit was ₦1.6 billion in H1 2022, 9.4% lower than the ₦1.8 billion recorded in H1 2021.
The company said the decrease is attributable to the poor performance in our Animal Feeds and Other Edibles businesses. Operating profit margin also contracted 73 bps to 3.1%. Operating expenses as a percentage of sales increased 50 bps YoY to 15.3%.
The Group recorded higher finance costs which rose to N2.0 billion from N753.45 million in H1 2021. The company the rise is due to increased short-term borrowings in the Animal Feeds and Other Edibles segment to support efforts to build inventory,
In addition, ₦338 million of finance cost represents impact of net foreign exchange loss on cash and financial securities held in foreign currencies. Also, Finance income decreased 29% YoY due to a lower interest yield on investments.
Loss per share was 18 kobo, compared to an earnings per share of 5 kobo per share in H1 2021.
Free Cash Flow for the period was negative ₦4.5 billion in H1 2022, compared with negative ₦18.9 billion in 2021, due to lower cash outflow from operating expenses and capital expenditure in H1 2022.
Group Performance and Financial Review: Q2 2022
Revenue in Q2 2022 was flat at ₦24.4 billion. The Packaged Food and Beverages segment grew marginally (+3%) and the Quick Service Restaurant segment (+27%) recorded strong growth.
Revenue growth in the Packaged Food and Beverages segment was driven by growth in the dairies and water categories, and revenue growth in the Quick Service Restaurant segment was driven by the addition of company owned stores.
Gross profit in Q2 2022 decreased by 10.5% QoQ to ₦3.9 billion on account of input cost escalation across all businesses. Gross profit margin also contracted by 178 bps.
Operating loss was ₦257 million in Q2 2022, compared to an operating profit of ₦626 million in Q2 2021, driven by gross profit under performance, particularly in the Animal Feeds and Other Edibles segment, and increase in selling and distribution expenses. Operating loss margin was –1.1%, compared to an operating profit margin of 2.6% in Q2 2021.
Operating expenses as a percentage of sales increased 147 bps QoQ to 17.6%.
The Group recorded higher finance costs on account of increased short-term borrowings in the Animal Feeds and Other Edibles segment to support efforts to build inventory. Finance income decreased 17% QoQ due to lower yield on treasury investments.
Share of loss from associate companies was improved QoQ at ₦79 million, compared to the share of loss from associate companies of ₦162 million in Q2 2021.
Loss before tax was ₦966 million, compared to a profit before tax of ₦267 million in Q2 2021. Loss after tax from continuing operations was ₦1.3 billion compared to a profit after tax of ₦96 million in Q2 2021.
Total loss for the period was ₦1.4 billion. In Q2 2022, the Group incurred an expense of ₦35 million as part of
the voluntary winding up process of UNICO CPFA Limited, a discontinued operation.
Loss per share was 36 kobo compared to the loss per share of 7 kobo in Q2 2021.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.
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