NIGERIA – 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.

November 9, 2016;