Friday, March 29, 2024

Price hike drives NASCON to positive growth in 2022

BY FESTUS OKOROMADU

The strong financial performance reported by NASCON Allied Industries Plc in its audited financial report for the year ended 31 December 2022, released on Friday, has been attributed to general increase in the prices of its products (salt and seasoning).

The audited financial report showed that revenue for the year under review grew by 76.64 percent to N58.786 billion from N33.279 billion in the corresponding period of 2021 However, profit after tax rose by 84.1 percent to N5.469 billion from N2.971 billion in 2021, leading to earning per share growth of N2.06 per ordinary share of 50 Kobo each as against N1.12 recorded in a similar period of 2021.

The board of directors of NASCON is proposing a final dividend of N1.00 per share which represents a dividend yield of 8.2 percent based on the last closing price of N12.20 per share on March 2, 2022.

Commenting on the result, financial analysts from Cordros Securities said the revenue growth was driven by price increases instituted across NASCON’s salt and seasonings products. “Unsurprisingly, revenue from both business segments grew markedly – Salt (+79.8% y/y | 91.0% of revenue) and Seasoning (+50.0% y/y | 9.0% of revenue). Across NASCON’s regional footprint, the Northern region (+96.6% y/y) recorded the most growth, with the Western (+46.5% y/y) and Eastern (+30.1% y/y) regions following suit, accordingly.

The fullyear numbers revealed that the North’s share of total revenue increased to 69.9% (2021FY: 62.8% y/y), as the food producer lost traction gained in the West (24.2% of total revenue | 2021FY: 29.1%) and East (5.9% of total revenue | 2021FY: 8.0%),” Financial Analyst stated. A further breakdown of the results by Cordros showed that “Across NASCON’s regional footprint, the Northern region (+96.6% y/y) recorded the most growth, with the Western (+46.5% y/y) and Eastern (+30.1% y/y) regions following suit, accordingly.

The fullyear numbers revealed that the North’s share of total revenue increased to 69.9% (2021FY: 62.8% y/y), as the food producer lost traction gained in the West (24.2% of total revenue 2021FY: 29.1%) and East (5.9% of total revenue 2021FY: 8.0%.” “Gross margin increased by 581bps to 41.7% in 2022FY, as the higher revenue growth (+76.6% y/y) offset the increase in cost of sales (+60.6% y/y).

The cost breakdown attributes the bulk of the cost increases to higher charges for raw materials consumed (+69.0% y/y) and manufacturing expenses (+63.2% y/y). “Consequently, EBIT margin increased by 179bps to 14.8% (2021FY: 13.0%), amid a 59.9% y/y increase in operating expenses. Meanwhile, EBITDA margin declined by 185bps to 18.8% (2021FY: 20.7%).

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