Paints drag UAC 2020 earnings down as #EndSARS disrupts operating income
Despite reporting 6.3% rise in revenue for fourth quarter 2020, UAC of Nigeria Plc’s earnings was negatively impacted by the EndSARS protest, while its paint segment dented the company’s financial performance during the period under review.
UAC’s revenue grew by 6.3% to N23.7 billion, rising above the N22.3 billion grossed in the corresponding period of Q4 2019. The company, however, was unable to prevent a decline in its profit margin which dipped by 13.1% in Q4 last year, UAC’s earnings report disclosed.
The Gross Profit hit N4.3 billion in the fourth quarter of 2020, against the N4.9 billion UAC reported for the same period in 2019, despite the 30% drop in Operating Expenses, which reduced to N3.3 billion in Q4 2020.
The earnings report obtained from the Nigerian Stock Exchange (NSE) further revealed other operating income also took a dip from N1.1 billion of Q4 2019, to N706 million in the last three months of last year.
The Paint and QSR company rebound in Profit Before Tax, which rose to N2.8 billion in Q4 2020, against the N1.4 billion of the corresponding quarter. Profit After Tax followed the same path, rising by 135.5% during 2020 fourth quarter from N1.03 billion in Q4 2019 to N2.4 billion.
In a breakdown of the UAC financial statement, Ripples Nigeria discovered that of all revenue sources for the company, its Paint segment took a nosedive while other segments; Animal Feeds and Other Edibles, Packaged Food and Beverages as well as Quick Service Restaurants recorded growth.
The Paint segment declined 1.2% to N3.2 billion in Q4 2020, as UAC confirmed the protest partially impacted sales due to disruption to supply chain, which resulted to hike in cost of products. UAC holds shares in paints firms, CAP Plc and Portland Paints.
The paints companies are heading towards a merger pact this year. The merger is expected to strengthen UAC’s balance sheet, as it has 51.49% and 85.98% ownership respectively in CAP Plc and Portland Paints.