Nigeria’s oldest conglomerate, UAC of Nigeria recorded a pre-tax loss of N1.1 billion in the third quarter as the conglomerate struggled with high loan finance amid sluggish sales.
The nine-month report of UACN for the period ended September 30, 2022 showed that sales rose by nine per cent to N78 billion in the third quarter. Gross profit was however flat at N12 billion. Operating profit dropped by 66 per cent to N758 million. Loss before tax stood at N1.1 billion in September 2022 as against profit before tax of N1.4 billion recorded in comparable period of 2021..
The group’s gross margin had declined by 148 basis points to 15.8 per cent, which management attributed to rising raw material costs. Operating profit margin also decreased by 215 basis points to 1.0 per cent, driven majorly by losses in the group’s animal feeds business.
Group Managing Director, UAC of Nigeria (UACN) Plc, Fola Aiyesimoju said the profitability of the group was impacted by lower operating profit and higher finance costs.
”Our performance in the third quarter was negatively affected by losses in our animal feeds segment, which recorded a loss of N1.9 billion on account of margin pressure, high levels of debt and inventory, and rising borrowing costs.
“We are working to reduce costs and debt levels. We remain committed to our growth and expansion strategy but are cognizant of the heightened levels of risk in light of challenging global and domestic macroeconomic conditions.
“Rising levels of insecurity continue to disrupt operations with the animal feeds segment most affected; recent flooding in the South East of Nigeria impacted operations; however, we were fortunate to avoid material damage to plant and inventory.”
We continue to monitor the longer-term implications of flooding on agricultural output, food security and logistics in the region,” Aiyesimoju said.