NASCON Allied Industries Plc (NASCON) released its 2022FY audited results Thursday, in which the company reported an 84.1% y/y growth in 2022FY EPS to NGN2.06 (2021FY: NGN1.12). The growth in 2022FY EPS was driven mainly by the stellar expansion in the company’s topline (+76.6% y/y). NASCON’s board proposed a final dividend of NGN1.00/s, which implies a dividend yield of 8.2% based on the last closing price of NGN12.20/s (02 March).
Revenue grew by 76.6% y/y in 2022FY, driven by price increases instituted across NASCON’s salt and seasonings products. Unsurprisingly, revenue from both business segments grew markedly – Salt (+79.8% y/y | 91.0% of revenue) and Seasoning (+50.0% y/y | 9.0% of revenue). Across NASCON’s regional footprint, the Northern region (+96.6% y/y) recorded the most growth, with the Western (+46.5% y/y) and Eastern (+30.1% y/y) regions following suit, accordingly. The full-year numbers revealed that the North’s share of total revenue increased to 69.9% (2021FY: 62.8% y/y), as the food producer lost traction gained in the West (24.2% of total revenue | 2021FY: 29.1%) and East (5.9% of total revenue | 2021FY: 8.0%).
Gross margin increased by 581bps to 41.7% in 2022FY, as the higher revenue growth (+76.6% y/y) offset the increase in cost of sales (+60.6% y/y). The cost breakdown attributes the bulk of the cost increases to higher charges for raw materials consumed (+69.0% y/y) and manufacturing expenses (+63.2% y/y).
Consequently, EBIT margin increased by 179bps to 14.8% (2021FY: 13.0%), amid a 59.9% y/y increase in operating expenses. Meanwhile, EBITDA margin declined by 185bps to 18.8% (2021FY: 20.7%).
Net finance costs increased significantly by 282.7% y/y, underpinned by a steep increase in finance cost (+433.8% y/y). We highlight that the surge in finance costs was driven by a significant increase in NASCON’s interest on lease liabilities (2022FY: NGN568.12 million | 2021FY: NGN49.58 million). Meanwhile, finance income in the period also increased markedly, driven by an increase in interest income on short term fixed deposits (2022FY: NGN394.40 million | 2021FY: NGN51.32 million).
Overall, PBT rose by 97.6% y/y to NGN8.37 million in 2022FY (2021FY: NGN4.24 billion). Following a tax expense of NGN2.90 billion, profit after tax (+84.1% y/y) printed NGN5.47 billion in 2022FY (2021FY: NGN2.97 billion).
Experts at Codros Capital say NASCON’s 2022FY result outperformed our expectations with the company remaining resilient as it maintained the pace of top- and bottom-line growth it started the year with. Furthermore, we like that the food producer maintained margins at still high levels despite the strong headwinds in the year. YTD, NASCON is up 9.0%, compared to the Consumer Goods index (+17.2%) and the broader All-Share index (+8.6%).
