Despite the myriad of challenges facing the consumer goods sector, NASCON Allied Plc (NASCON) in the first half of 2023 proved its mettle. The firm’s topline expansion was propped by price increments across its salts and seasoning segments compared to the same period last year. The firm also recorded higher sales volume from sale of salt in the B2C (Sachet) market, compared to the edibles. In addition, a new seasoning product (Dangote Classic) was introduced in the Northern region (its main seasoning market). Thus, NASCON’s revenue increased by 51.89%YoY to NGN38.17bn (from NGN25.13bn in H1:2022). We note that a significant portion of the overall topline performance was recorded in Q2:2023 standalone where revenue increased by
48.01%YoY to NGN21.26bn (from NGN14.37bn in Q2:2022). We opine that the resolution of the
macroeconomic challenges (like currency crisis and electioneering activities) which impacted the firm’s Q1:2023 performance and the increase in demand for seasoning product in the North due to festivities in Q2:2023 boosted the firm’s revenue for Q2:2023 standalone. On a regional basis, we highlight that the Northern region remains the major contributor (c.72%) of the firm’s total revenue expanding by 60.85%YoY, while the Eastern (+60.76%YoY) and Western (+26.64%YoY) regions also recorded significant upticks. We expect the introduction of the new seasoning products in the North to continually boost performance for the second half of the year. While we highlight that the inflationary environment is bound to pressure consumer wallets, we expect the essential nature of salt products to sustain revenue for the firm despite the aforementioned price increments. The influx of unbranded smuggled products and the stiff competition in the salt and seasoning markets could however portend downside risks to the expectation. Premised on this, we model a 26.28% growth in topline to NGN74.23bn.
