A net finance income of N198m more than offset a decline in profits from associates of around -34.3% y/y and led to the PBT growth during the quarter. Gross margin and opex were flattish y/y. The net finance income posted during the quarter suggests that realised benefits are already coming through from UACN’s property development company’s (UPDC) refinancing program.
UACN’s sales and PBT were both up by 10.1% q/q and 22.6% q/q respectively. The net finance income posted in Q2 more than offset a slight gross margin contraction of -42bp q/q and a double-digit rise in opex. PAT declined by -10.0% q/q on the back of a higher tax rate in Q2 of 39.7% vs. 25.3% in Q2 2015.
For the listed subsidiaries, Livestock Feeds’ Q2 sales were up 16.3% y/y to N2.5bn. Growth was likely supported by increased fish feeds sales. PBT of N58m however declined by 11% y/y on the back of higher production and operating costs.
Gross margin contracted by around 680 basis points (bps) y/y to 9.4% while opex grew by 12% y/y. Q2 Sales for UPDC were down 48% y/y to N1.1bn in Q2. PBT came in at N248m compared with a loss before tax of N1.8bn in the corresponding quarter of 2015.
Property sales were up 162% q/q to N600m.
More importantly, UPDC’s finance cost is more moderate post the conclusion of the first tranche of the firm’s commercial paper program. The firm recorded a negligible net finance charge in Q2. Rising opex is however a major concern for now (up 30% y/y during the quarter).
