UAC of Nigeria Plc [UACN] has made a big turnaround from a loss of almost N4 billion in 2022 to registering an after-tax profit of N7.8 billion for the group in 2023.
This is the biggest profit for the company in many years, just as we expected in our earnings outlook for the group for the full year.
The final quarter delivered an after-tax profit of over N1 billion, topping up the third quarter closing profit of N6.7 billion to N7.8 billion.
The full-year unaudited financial report of the conglomerate at the end of December 2023 has justified our optimism that improving sales could sustain the company’s improved operating momentum through to the final quarter.
Quarterly sales revenue peaked at over N37 billion in the final quarter, which is an increase of 18 percent and contributed more than 31 percent of the full-year turnover of N118.7 billion.
The revenue increase was further quickened by declines and slowdowns in costs – which improved profit capacity in the final quarter.
Production cost was slightly down for the closing quarter at N29.5 billion, which jerked up gross profit four times to N7.7 billion for the period.
Selling and distribution costs also went down slightly to N2.2 billion while other operating income of N342 million took the place of other operating loss of N425 million over the period.
The administrative cost is the only major cost line of the company that grew in the final quarter at 60 percent to N3.7 billion.
However, the increase in sales and cost savings were good enough to turn an operating loss of over N3 billion in the same quarter in 2022 into an operating profit of over N2 billion in the fourth quarter of 2023.
Further strength came from an increase of 114 per cent in finance income to N1.9 billion and a 5 per cent decline in finance cost to N1 billion, which reversed the company’s position from a net finance cost of N269 million to net finance income of N794 million over the period.
Also, an increase in the share of associate profit from close to N142 million to about N235 million helped to build the bottom line in the final quarter.
The company realised a pre-tax profit of N3 billion in the fourth quarter, rising from a pre-tax loss of N3.3 billion in the same quarter in the preceding year.
UACN’s full-year position shows an increase of 8.6 percent in turnover to N118.7 billion at the end of December 2023. Production cost closed flat at roughly N97 billion for the year, which enabled an increase of 53 percent in gross profit to N21.8 billion.
There was a big boost of over N7 billion from profit from the sale of property, which propelled a windfall of N8.7 billion from other operating income compared to the preceding year’s figure of N743 million.
The company also saved costs from selling and distribution expenses, which grew marginally to N8.8 million in the year. However, major increases were recorded in impairment loss on assets – which rose from less than N61 million to N1.3 billion as well as the administrative cost that grew by 29 percent to over N11 billion at the end of the year.
The cost savings and revenue gains powered the company’s big turnaround from an operating loss of N2.4 billion in 2022 to an operating profit of over N9 billion at the end of 2023.
Another boost came from finance income, which multiplied more than four times to over N6 billion at the end of the year. The increase was driven by net foreign exchange gains of N4.5 billion, rising from N326 million in the prior financial year.
Finance costs closed flat at N3.6 billion for the year, also turning the numbers around from a net finance cost of over N2 billion in 2022 to a net finance income of N2.7 billion at the end of 2023.
Adding yet to the making of the good earnings story of the company in 2023 is the share of associate profit that jumped more than eight times from N103 million to about N860 million over the period.
UACN closed 2023 operations with a pre-tax profit of N12.7 billion against a pre-tax loss of N4.4 billion in the previous year. The company’s after-tax profit amounted to N7.8 billion at the end of 2023, recovering from a loss of roughly N4 billion in the preceding year.
Earnings per share amounted to N2.76 at the end of the 2023 full year, rising from a loss per share of N1.07 in 2022.
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