One of the
oldest multinational conglomerates in Nigeria, UAC of Nigeria Plc announced its
third quarter 2016, Q3’16, results reversing the declines it had recorded in
the preceding interim results
But investors seem too weary to accord the stock a positive response as
mark-down on the price persists. Yesterday, the stock closed on N18.60 as
against N18.68 it traded, October 31, 2016, the day the impressive result was
announced. Thus year-to-date, YtD, return to investors worsened to -10.4 per
cent.
The
company’s Q3’16 result shows it recorded a mild rise in revenue at N57.7
billion or 4.8 per cent above the N55.1 billion it recorded in the
corresponding period of 2015. The revenue figures appear more significant
quarter-on-quarter (QoQ) as it rose 8.4 per cent to N20.9 billion. Perhaps even
more significant was the subsidiary contributions where its flagship, the property
division trading as UPDC, which had fallen into bad weather with property glut
accentuated by adverse macroeconomic headwinds. The property arm had
consequently recorded such huge losses that dragged down the entire group in
the previous results.
But the
story is now different as a rebound is showing with a massive 37 per cent surge
QoQ. The group rebound was, however, driven by the sustained good performance
it’s foods and beverages segment which grew by 12.3 per cent year-on-year (YOY)
and 13.8 per cent QoQ, given the overall volume it delivered. In overall this
segment contributed 76.7 per cent of the group revenue during the period under
review. The other significant component of the good result was a huge rise in
profitability. Profit before tax, PBT, rose by 27.2 per cent to N6.3 billion
while profit after tax, PAT, rose 42.4 per cent to N4.3 billion. Moreover, the
company is in a good fight against cost, holding Cost of Sales growth rate at
5.5 per cent growth, significantly below inflation.
Operating
expenses was also on moderate growth rate at N8.2 billion, just about 3.5 per
cent ahead of corresponding period of last year. It is instructive to note that
UACN performance did beat most analysts estimates. For instance PAT beat
consensus estimate by 12.8 per cent. With N2.9 billion from “Other Income”, the
company surpassed estimate by CardinalStone Research estimate by a huge 48.9
per cent.
By Emeka Anaeto/Vanguard
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