NASCON Allied Industries Plc, one of Nigeria’s largest makers of salt, has reported a revenue growth to the tune of 55.6 percent year on year, in the second quarter (Q2) of the financial year ending December 31, 2022. Half year revenue growth stood at 43.0 percent.
Shareholders of NASCON are in for a good time as Earnings per Share (EPS) in half year 2022 increased to N1.16 from N1.09 in half year 2021.
According to analysts, the EPS increase was driven by the sturdy growth in sales (55.6% y/y) recorded in the reporting period.
The company’s gross revenue was largely buoyed by sales in the northern part of the country where a growth of 68.5 percent was recorded in the review unaudited period.
In the same vein, revenue from the South West grew 22.3 percent year on year, contributing 26.4 percent to gross revenue while the Eastern region contributed 5.1 percent, growing 31.7 percent. Regions maintained the momentum witnessed in Q1-22.
Gross margin increased by 83bps to 39.0 percent, as the faster revenue growth muted the impact of the surge in cost of sales (53.5% y/y). On the higher costs, the breakdown provided in the financials revealed that the bulk of the increase emanated from higher raw materials costs (+62.6% y/y), highlighting the effects of higher commodity prices amid sustained FX illiquidity, and elevated inflationary pressures in the domestic economy. On a half year basis, gross margin (-618bps) compressed to 33.3%, reflecting the overwhelming pressures inherent in Q1-22.
Further down, the company recorded a net finance cost of N67.91 million in Q2-22 (vs net finance income of N0.97 million in Q2-21), underpinned by an increase in finance cost to N145.74 million (Q2-21: N11.86 million). We attribute the increase in finance cost to higher interest on lease liabilities which constituted the entirety of the finance cost line.
Overall, profit before tax grew sharply by 59.5 percent y/y to N1.71 billion (Q2-21: N1.07 billion). Following a tax expense of N556.87 million, profit after tax printed N1.15 billion (Q2-21: N727.33 million), translating to a growth of 58.0 percent y/y.
Commenting on the performance, Cordros Research said: “NASCON’s Q2-22 result outperformed our expectations as we initially believed the company’s ballooning costs would constrain margins and hamper earnings growth.
Notwithstanding, we are still cautious on our expectations going into H2-22, given the strong headwinds we identified.”
