Uac Of Nigeria Plc · NSENG:UACN
Uac Of Nigeria — FY2022 Earnings Presentation
34 slides from Uac Of Nigeria's earnings presentation, Apr 6, 2023
Slide 1: UAC of Nigeria PLC FY 2022 Results
UAC of Nigeria PLC FY 2022 Results 06 April 2023 Fola Aiyesimoju – Group Managing Director Funke Ijaiya-Oladipo – Group Finance Director
Slide 2: Disclaimer
Disclaimer 2 This presentation contains forward-looking statements which reflect management's expectations regarding UAC of Nigeria PLC, its subsidiaries and associate businesses (“UAC”, the “Company” or “Group”) future growth, results of operations, performance, business prospects, operating market
Slide 3: Contents
Contents 3 Introduction 4 Operating context 5 Strategic initiatives 9 Segment performance highlights 13 FY 2022 financial performance 21 Outlook 26 Appendix 1: Additional financial information 29
Slide 4: Introduction
Introduction 4 ▪ 2022 was a difficult year, as UAC Group recorded a net loss of ₦3.9bn, a decline of ₦6.6bn from ₦2.6bn net profit reported in 2021 ▪ The primary sources of under performance were our Animal Feeds and Packaged Food and Beverages businesses ▪ Significant management attention was devot
Slide 5: Operating Context
Operating Context
Slide 6: There were no changes to UACN’s group structure
There were no changes to UACN’s group structure 6 HoldCo* ▪ ₦ 5.0 billion in Cash2 ▪ ₦ 2.2 billion in Eurobonds2 ▪ ₦ 2.4 billion in Investment Property Assets2 Agro Allied Packaged Food Paints Quick Service and Beverages Restaurants Operating core * * ▪ Non-controlling interests in two companies − M
Slide 7: Macroeconomic conditions in 2022 were very difficult
Macroeconomic conditions in 2022 were very difficult, with 3% GDP growth, 21% 7 inflation, MPR at 17%, and Naira devaluation Real GDP Growth Exchange Rate ₦:$ 5.0% CBN rates Parallel 4.0% 4.0% 3.5% 3.5% 3.1% 1.9% 2.3% 1000 0.1% 0.5% 800 600 400 (3.6%) 200 (6.1%) 0 2017 2011 2012 2013 2014 2015 2016
Slide 8: Full effect of raw material price escalation felt in 2022
Full effect of raw material price escalation felt in 2022 8 Animal Feed Paints Maize Soya Bean Resin Titanium Dioxide 186 180 223 Food 251 155 197 N/Kg 218 132 100 100 100 100 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 Flour Vegetable Oil Fat-filled Milk Sugar 228 142 203 203 111 15
Slide 9: Strategic initiatives
Ives ic initiat ——— Strateg
Slide 10: Strategic initiatives achieved in 2022
Strategic initiatives achieved in 2022 10 Invested for ▪ UAC Foods: ₦2.8bn invested in increasing capacity for our SWAN water business 3x growth ▪ UAC Restaurants: ₦1.2bn invested rolling out corporate stores ▪ Invested ₦2.1bn to migrate from end of life, on premise SAP ECC system to cloud based SAP
Slide 11: New SWAN line
New SWAN line 11
Slide 12: New rolled-out Mr Bigg’s and Debonairs Pizza stores
New rolled-out Mr Bigg’s and Debonairs Pizza stores 12
Slide 13: Segment Performance Highlights
Segment Performance Highlights
Slide 14: Animal Feeds segment disproportionately impacted Group profitability
Animal Feeds segment disproportionately impacted Group profitability 14 ▪ Decline in volumes, particularly Grand Cereals Limited, on account of operational challenges which negatively impacted customer service − Stockpiled raw materials at peak prices affecting gross margins Animal Feeds & − 1.6x in
Slide 15: Reduced Animal Feeds leverage and inventory in 2022
Reduced Animal Feeds leverage and inventory in 2022 15 Animal Feeds Revenue (in ₦’mn) Animal Feeds Net Profit (in ₦’mn) 65,939 YoY Growth Revenue +5.1% COGS1 +16.1% 62,711 Opex2 +19.7% Net finance cost +122.9% 2021 2022 Animal Feeds Inventory (in ₦’mn) Animal Feeds Leverage (in ₦’mn) 267 40,857 33,3
Slide 16: Packaged Food and Beverages segment underperformed
Packaged Food and Beverages segment underperformed 16 Packaged ▪ 100% owned business post acquisition of Tiger Brands’ stake in 2021 Food and Beverages ▪ Business most impacted by ERP migration segment ▪ H1 2022 profit of ₦361mn vs H2 2022 loss of ₦533mn (23% of Group ▪ Snacks (57% of sales): Gramma
Slide 17: Packaged Food and Beverages segment impacted in H2 2022
Packaged Food and Beverages segment impacted in H2 2022 17 Profit After Tax, in ₦ mn (FY 2021 to FY 2022) H2 performance impacted Full year loss of ₦172mn a result 1,005 by ERP migration of underperformance in H2 2022. 361 (172) (533) FY 2021 H1 2022 H2 2022 FY 2022
Slide 18: Paints segment outperformed
Paints segment outperformed 18 ▪ #1 paints player in Nigeria by market share ▪ Deteriorating macro and inflation impacted material costs, conversion costs, and operating expenses Paints segment ▪ Higher prices of diesel, kerosene, other key raw materials, and distribution cost per litre (15% of ▪ Im
Slide 19: QSR segment achieved store roll out targets
QSR segment achieved store roll out targets 19 ▪ Shifted QSR strategy from 100% franchised stores to corporate store led model ▪ Target to roll out 50 corporate stores between 2021 - 2025 ▪ In 2022 Quick Service − ₦1.2bn invested rolling out 19 Mr Bigg’s and Debonairs Pizza stores. Total of 30 corpo
Slide 20: Associate companies returned to profitability in 2022
Associate companies returned to profitability in 2022 20 ▪ Sale of more properties by UPDC compared to prior period, particularly Pinnock Prime Estate UPDC ▪ UPDC Hotel was reconsolidated into UPDC’s financial statement as continuing operations in September 2022. The hotel was Key themes previously
Slide 21: FY 2022 Financial Performance
FY 2022 Financial Performance
Slide 22: 2022 financial highlights
2022 financial highlights 22 Operating Free Cash Return on Revenue EPS1 Profit Flow Invested Capital2 FY FY FY FY FY ₦109bn (₦2.4bn) (107 kobo) ₦9.6bn (4.9)% +7.8% ₦5.0bn3 62 kobo (₦19.1bn) (973) bps vs FY 2021 FY 2021 FY 2021 FY 2021 vs FY 2021 (1) Earnings per share from continuing operations (2)
Slide 23: Key factors impacting Group operating profit
Key factors impacting Group operating profit 23 Operating Profit Bridge, in ₦ mn (FY 2021 to FY 2022) • Net fair value loss on investment properties of Increased revenue across ₦806mn vs. gain of ₦1.1bn in 2021 all operating segments • Non-repetition of one-off dividend and fair value except Package
Slide 24: Impact of Animal Feeds segment on 2022 performance (PAT)
Impact of Animal Feeds segment on 2022 performance (PAT) 24 Profit After Tax Bridge, in ₦ mn (FY 2021 to FY 2022)
Slide 25: Balance sheet and liquidity
Balance sheet and liquidity 25 Net Assets Net Debt Net Capex Cash Cycle ₦45.3bn ₦2.8bn ₦7.1bn 76 days (₦5.6bn) (₦5.8bn) (₦3.5bn) (63) days vs Dec 2021 vs Dec 2021 vs Dec 2021 vs Dec 2021
Slide 26: Outlook
Outlook
Slide 27: Corporate action: N644 million dividend to UAC shareholders
Corporate action: N644 million dividend to UAC shareholders 27 ▪ Earning per share for UAC, the Holding Company, is 24 kobo for FY2022 ▪ Total ordinary dividend of 22 kobo per ordinary share of 50 kobo (₦644 million) FY 2022 ▪ 93% payout ratio Dividend (N644 million) ▪ Qualification date: June 6, 20
Slide 28: Outlook
Outlook 28 Key priorities − Performance ▪ Reverse underperformance of the Animal Feeds and Other Edibles businesses ▪ Improve performance of the Packaged Food and Beverages business − Structure ▪ Continued focus on simplicity − Efficiency ▪ Sharp focus on costs. Tackle duplicated/ non-value added co
Slide 29: Appendix 1: Additional financial information
Appendix 1 Additional financial information
Slide 30: Income statement
Income statement 30 ₦ mn, unless otherwise stated FY 2022 FY 2021 D% Revenue 109,270 101,377 8% Gross Profit 14,237 17,540 (19%) Gross Profit Margin (%) 13% 17% (427 bps) Operating Profit (2,384) 5,014 n/m Operating Profit Margin (%) (2%) 5% (713 bps) Net Finance Income (2,085) (10) 20528% Share of
Slide 31: Performance Snapshot – FY 2022
Performance Snapshot – FY 2022 31 Revenue Profit Before Tax N mn FY 2022 FY 2021 D% N mn FY 2022 FY 2021 D% Group 109,270 101,377 7.8% Animal Feeds & Other Edibles (6,863) 1,195 n/m Animal Feeds & Other Edibles 65,939 62,711 5.1% Paints 3,444 1,693 103.4% Paints 19,208 15,355 25.1% Packaged Food & B
Slide 32: Financial Position – 31 December 2022
Financial Position – 31 December 2022 32 Summary Balance Sheet Working Capital N mn Dec-22 Dec-21 D% N mn Dec-22 Dec-21 D% Non-current Assets 45,994 42,029 9.4% Inventory 24,396 36,214 (32.6%) Current Assets 47,292 56,353 (16.1%) Trade Receivables 2,267 1,820 24.6% Other Assets 542 550 (1.5%) Trade
Slide 33: Net Debt Position
Net Debt Position 33 Net (Debt)/Cash Position as at 31 Dec 2022 (in ₦ mn) Net Cash Cash & Cash Short-Term Long-Term (excl. Intra- Intra-Group Net Cash (incl. Equivalents Debt Debt Group) Payable Intra-Group) UAC Company 4,958 - - 4,958 - 4,958 Other Operating Segments 11,239 (16,537) (3,702) (9,000)
Slide 34: Cash Flow
Cash Flow 34 PBT to Free Cash Flow ₦ mn, unless otherwise stated FY 2022 FY 2021 Profit Before Tax from continuing operations (4,365) 4,108 Profit/ (Loss) before tax from discontinued operations 7 (2) Non-Cash charges 6,085 1,981 Changes in working capital 16,021 (20,334) of which receivables 2,282