UAC of Nigeria Plc has reported a profit before tax of N25.828 billion for the year ending December 31, 2024, reflecting an impressive 109.30% year-over-year (YoY) growth compared to the previous year.
The unaudited Group financial statements, which have been reviewed, show that the company’s revenue surged by 63.96% YoY, reaching N197.614 billion.
This substantial increase in revenue was primarily driven by a 54% rise in edibles and feed, a 52% increase in paints, and a 102% surge in packaged foods and beverages.
Commenting on the results, the Group Managing Director, Fola Aiyesimoju, remarked, “We delivered strong performance in 2024, achieving revenue of N198bn and a profit before tax of N25bn, reflecting growth of 64% and 109%, respectively, compared to 2023.”
He added, “This outcome is due to the hard work, skill, and dedication of our leaders across the Group and their teams. At UAC, people are at the heart of our strategy, and I thank my colleagues for their efforts in generating these results.”
He went on to highlight that meaningful improvements in both growth and profitability were recorded across UAC’s core operating segments. Key initiatives that contributed to this success included aggressively pursuing new markets with value-driven products, a rigorous focus on pricing and margin, and careful risk management in relation to interest rates and foreign exchange.
UACN also delivered strong profitability metrics, with net profit rising by 90.43% and earnings per share (EPS) surging by 64.01%, reflecting significant growth in earnings and a higher value creation for shareholders.
The growth was underpinned by substantial improvements in margin, indicating enhanced cost efficiency and operational strength: Gross profit margin increased to 23.43% from 18% in 2023; Operating profit margin rose to 9.43% from 7.54%; Pre-tax profit margin climbed to 13% from 10.24%; Net profit margin improved to 8.54% from 7.39%.
Liquidity and cash also flow showed marked improvement. Net cash flow from operating activities surged to N6.478 billion, a significant turnaround from the negative N3.033 billion recorded in 2023. This improvement bolsters UACN’s financial flexibility, supporting future growth investments and expansion.
The current ratio improved to 1.45 from 1.21, aligning with stronger operational cash flow and confirming that UACN has sufficient short-term assets to cover its liabilities and sustain its financial momentum.
The company’s balance sheet has been significantly strengthened, with increased liquidity, a stronger asset base, and higher shareholder equity. The 59.56% rise in cash and cash equivalents enhances financial flexibility, while the 39.59% growth in total assets reflects expansion and improved operational strength. Furthermore, a 24.96% increase in total equity signals a healthier financial position for shareholders.
However, the increase in leverage presents a key concern. The debt-to-equity ratio rose to 63% from 52% in 2023, indicating that the company is relying more on borrowed funds to drive growth. While this has contributed to an elevated return on equity (ROE) of 27% (up from 17%), the cost of debt exceeds the return on assets (ROA) of 10.82%, which could exert pressure on profitability in the long term.
Although the stronger balance sheet and rising ROE are positive, the higher reliance on debt presents risks, particularly if borrowing costs continue to rise. Effectively managing leverage will be crucial for sustaining profitability and avoiding financial strain in the future.
The strong financial performance appears to be reflected in the stock price. In 2024, the share price recorded a 145% year-to-date (YtD) return, with the momentum continuing into 2025. As of the close of trading on February 6, 2025, the stock had gained 14.6% YtD, indicating sustained investor confidence.
Looking ahead to 2025, UACN plans to continue focusing on attracting, developing, retaining, and incentivising high-quality talent to create value for its customers. The company also intends to prioritise profitable growth, scalability, and simplicity to generate shareholder value.
While the financial fundamentals remain strong, the rising leverage and increasing cost of debt are areas to monitor closely. Effective management of these factors will be key to maintaining profitability and sustaining the company’s growth trajectory.