Thursday, March 28, 2019

Nascon Allied: Expect big profit leap at full year 

Nascon Allied: Expect big profit leap at full year 
December 14
22:26 2017

Nascon Allied Industries is on the way to delivering one of the biggest profit advances from the food/beverages group at the end of 2017. The salt manufacturing company has sweetened shareholders’ expectations so far in the year with a year-on-year jump of 130% in after tax profit at the end of the third quarter trading last September.

The principal business of the company is refining and sales of edible, bulk and Industrial salt as well as manufacturing of tomato paste, vegetable oil and food seasoning. Dangote Industries Limited owns 62.19% of Nascon Allied Industries’ issued share capital.

At over N4 billion, after tax profit was standing a clear 67% above the 2016 full year closing figure at the end of the third quarter. It is headed to grow profit for the third straight year from a drop in 2014. The impressive earnings performance and outlook for the company this year has seen a share price advance of over 178% on January opening at December 12 close.

The company has stepped up revenue growth and a strong gain in profit margin has empowered profit capacity. The ability to convert an increasing proportion of the growing revenue into profit is the operating strength for Nascon Allied Industries in 2017.

The company closed third quarter operations with a turnover of N20.71 billion, which is a year-on-year growth of 62%. Based on the third quarter growth rate, sales revenue is projected at over N28 billion for Nascon Allied Industries at the end of 2017. Turnover is therefore expected to speed up from a 13% growth in 2016 to over 53% in 2017.

At over N13 billion, cost of sales remains large relative to revenue though a slowdown was achieved in the third quarter. That was good enough to enhance gross profit margin from 33% in the same period in 2016 to 37% at the end of September 2017. That permitted a 79% advance in gross profit to N7.63 billion.

The rest of the developments in the income statement reinforced the moderation of cost of sales and boosted profit capacity. These include an outstanding growth in investment income to over N141 million – which has far exceeded the full year figure in 2016.

Administrative cost also moderated relative to sales revenue and distribution expenses declined moderately. There was a sharp drop of 61% in finance expenses to N72 million in reflection of a minor balance sheet debt of only N38.6 million.

After tax profit amounted to N4.05 billion at the end of the third quarter, an increase of 130% year-on-year. The full year expectation is N5.6 billion for Nascon Allied Industries at the end of 2017. That would be a 131% advance over the profit figure of N2.42 billion the company posted at the end of 2016. After tax profit had increased by 14.7% in the 2016 full year.

Net profit margin has improved from 13.8% to 19.6% over the review period. The improvement reflects accelerating sales revenue and a general moderation of costs.

The company earned N1.53 per share at the end of September. The full year expectation is N2.11 for Nascon Allied Industries in 2017. It earned 91 kobo at the end of 2016 and gave out 70 kobo per share in cash dividend.


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