In its recently concluded 2020FY, United Africa Company of Nigeria (UACN) reported a slowdown in revenue growth, posting an increase of 2.72%YoY to NGN81.35bn (vs. 2019FY: NGN79.20bn). While three of the firm’s four product divisions witnessed improvement in revenue despite the challenging macroeconomic environment, the group’s overall performance lagged that of 2019FY (where revenue grew by strong double digits: 12.39% YoY). The Animal Feed and Other Edibles division, which accounts for the bulk of total revenue (c. 60%), witnessed a 5.22% uptick, influenced by a combination of higher volumes and higher product prices. On the other hand, the Packaged Food and Beverages segment (+1.52%), and Quick Service Restaurant (+1.77%) both recorded sluggish revenue growths, while revenue from the paints segment declined (-6.14%). For the latter, its weak performance was due largely to a significant decline in demand during the pandemic-induced lockdown. To expand its capacity and create room to maximize economies of scale, Management announced its intention to merge CAP and Portland Paints making the new combined entity the largest player in Nigeria’s Paints Industry. Similarly, we note Management’s renewed efforts at growing its QSR business division – by opening up new stores and investing in its distribution network. For 2021FY, we expect topline performance to be driven by the firm’s expansion initiatives and the improvement in its distribution networks. Hence, we project a 2021FY revenue of NGN84.20bn (growth rate of 3.49% compared to 2020FY).
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