C.H.I. Acquisition Boosts UAC Sales Threefold to ₦365bn in H1

UAC of Nigeria Plc is reaping the rewards of its acquisition of C.H.I. Limited, which has become the group’s key growth engine, driving a more than threefold surge in sales revenue to approximately ₦365 billion at the close of its half-year operations.

First-quarter performance suggested UAC was on track to surpass last year’s full-year sales of ₦340 billion by mid-year, aligning with earnings expectations.

The packaged food and beverages segment—now led by C.H.I. Limited—multiplied its revenue nearly eightfold year-on-year to over ₦307 billion, accounting for more than 84 per cent of group turnover for the period.

According to UAC’s interim report for the half-year ended June 2026, the company posted its strongest top- and bottom-line growth in recent years, thanks to expanded operating capacity. However, this strong performance masked declining sales in paints and losses in three other segments, particularly edibles and feed.

Group Managing Director Fola Aiyesimoju highlighted additional gains from robust cash generation, which enabled the group to reduce net debt by ₦37 billion.

Despite the positive half-year headline, second-quarter earnings slowed compared to the first quarter. Group sales revenue fell from over ₦191 billion in Q1 to below ₦174 billion in Q2, while after-tax profit dropped from ₦13.6 billion to ₦6.4 billion.

Three significant cost increases hit the second-quarter profits. Selling and distribution expenses, driven by inflation, surged fivefold year-on-year to ₦18.5 billion (up from ₦15.6 billion in Q1). Finance expenses also multiplied four times to ₦12 billion, with net finance cost climbing to ₦9.4 billion from ₦6.5 billion in Q1. Administrative costs soared by 124 per cent year-on-year to ₦11.7 billion.

These rising costs, combined with lower sales, compressed margins in Q2. The profit of ₦6.4 billion, however, still represented a 58 per cent year-on-year increase over the ₦4 billion earned in Q2 2025. Net profit margin dropped from 7.4 per cent to 3.7 per cent year-on-year in the quarter.

For the half-year, sales revenue growth outpaced production costs—up 230.6 per cent compared to 217 per cent year-on-year—fueling a 270 per cent jump in gross profit to ₦104.6 billion. Operating profit was up nearly fourfold to about ₦49 billion, despite substantial increases in operating costs.

A more than fourfold rise in finance income to nearly ₦11 billion helped offset finance expenses, which also jumped more than fourfold to around ₦27 billion. Net finance cost rose from ₦3.6 billion in H1 2025 to almost ₦16 billion for the review period.

The company’s borrowings declined from about ₦345 billion at year-end 2025 to ₦307 billion at the half-year, reflecting a major boost in cash generation from operating activities—from ₦10.8 billion to over ₦74 billion—enabling debt repayments.

Pre-tax profit grew more than threefold from ₦11.1 billion in H1 2025 to ₦34.4 billion in June 2026. However, higher tax expenses squeezed net profit margin, slowing after-tax profit growth to 172 per cent: net profit closed at ₦20 billion for the half-year, already more than double the ₦9.9 billion full-year profit reported for 2025.

Earnings per share jumped 177 per cent from ₦2.38 at H1 2025 to ₦6.58 at the end of June 2026, exceeding the full-year ₦3.62 per share posted in 2025.

Key watchpoints for the next quarter include whether the earnings slowdown seen in Q2 will reverse, and whether the cost pressures that eroded revenue in Q2 can be brought under control.