To consolidate its performance and sustain growth trajectory in 2018, Nascon Allied Industries Plc has assured shareholders that the firm would grow its business through the adoption of backward integration process and local sourcing of raw materials.
The company made this known recently at its 2017 annual general meeting held in Lagos recently. The managing director of the company, Paul Farrer explained that the firm entered into the product category in response to an identified supply gap within the Nigerian market where local production and imports could not effectively meet local demand.
“Tomatoes is on top of our priority, we are looking at backward integration and what we would do concerning the tomato paste going forward. The plants are not producing but we are looking at backward integration option for the past,” he said.
The executive director, Commerce of Nascon Allied Industries, Fatima Aliko-Dangote said the company will continue to increase its capacity production, saying that the company will bring in two machines for production this year that will enable increased in its production capacity and available of the products in the market.
Also, the chairperson of the company, Yemisi Ayeni said Nascon stakeholders’ dedication, commitment and hard work resulted in significant business achievement achieved in 2017 as it pursued the execution of the aligned strategic goals.
According to Ayeni, we leveraged on our core competencies, operated flexible pricing for our products, expanded our feet operations, focusing on reduced fleet turn-around time, while deploying compelling brand communications to grow value. This multi-pronged management approach enabled us to advance our overall business interest.
“Through intense focus and operational discipline, we delivered unprecedented returns in our salt segment and also increased sales in the highly competitive seasoning market.”
For the financial year ended December 31, 2017, she said “we recorded an impressive turnover of N27.06 billion, representing 48 per cent improvement on N18.29 billion in the previous year. Profit after tax increased by 121 per cent from N2.42 billion in 2016 to N5.34 billion and earnings per share grew by 122 per cent from 91 kobo billon to N2.02. In addition, the company maintained its financial stability with N9.4 billion cash reserves.
“The company under the period paid a dividend of a dividend of N1.50 per share totaling N3.07 billion and representing a payout ratio of 74 per cent. This is significant improvement from 2016 when the company paid 70 kobo, totaling N1.85 billion and translating to a dividend payout ratio of 77 per cent.”
She noted that the drawbacks we have been experiencing in the tomato paste and vegetable oil categories over the last two years continued in the year under review, saying that the required raw material, triple concentrate tomato paste and crude palm oil remained on the restricted list and efforts to source the required material locally were futile.
Going forward, she said “we are optimistic about the year ahead as we remain strongly committed to executing our sustainable growth strategy, thereby growing consumer trust and shareholder confidence.”
Farrer said Nascon strong results are exemplified with another consecutive year of improved turnover, profits and shareholders returns, saying that in 2017 the company executed strategic initiatives which had a positive impact on profitability and business sustainability.
According to him, people are our success and we have been working hard to activate the enormous potential that comes from workforce empowered to give their best.
“In 2017, over 300 employees were trained, equipped them with skills to develop their abilities and to improve their productivity. Employee welfare ranks high on our priorities and we have put in place a system which monitors and rewards excellence, hard work and dedication.”
He stated that the team pursued aggressive and sustained marketing of refined salt and seasoning brands, gaining significant increase in market penetration and ensuring availability of refined salt on table tops in markets across the country.
He explained that production reported an impressive performance in the year under review, delivering a combined production efficiency of 80 per cent as against 76 per cent in 2016, saying these results are attributable to yearlong improvements across its operations with particular strong efficiency performances recorded by the seasoning plant by 96 per cent.
On business outlook for the company in 2018, Farrer said that it will remain strongly focused on growth and would be leveraging on a range of opportunities within the business to build scale across its brands.
According to him, we will continue to leverage synergies and enhance efficiencies across the business operations to curtail costs, product innovation and improvement in our seasoning business.
Explaining the results further, the chief financial officer, Aderemi Saka said the year 2017 was a rebound for Nigeria economy and positive macro-economic trends resulted in a robust year for Nascon, saying “we increased total revenue by 48 per cent to N27.06 billion from N18.29 billion. Salt revenue increased by 50 per cent to N22.25 billion from N14.82 billion driven primarily by price increases per bag.
“Seasoning revenue increase by 41 per cent to N0.77 billion from N0.54 billion and freight revenue increased by 58 per cent to N3.86 billion from N2.44 billion. Vegetable oil revenue by declined 60 per cent to N0.19 billion and tomato paste had no revenue compared to N0.01 billion in 2016.
“Despite the increase in revenue, salt volume stayed flat in 2017 at 40,432 metric tonnes per annum (MT) compared to 403,505MT in 2016. Seasoning volume increased by four per cent in 2017 to 1,404MT compared to 1,347MT in 2017 driven by focusing our marketing attention on brand differentiation and strategic market activation and penetration.”
Saka noted that unfortunately, the 2015 Central Bank of Nigeria (CBN) FX policy continued to stall the importation of the necessary raw materials for both tomato paste and vegetable oil, saying that despite the challenges, in 2017, the company was able to sell 468MT of vegetable oil remaining in its tanks while it continue to focus on its efforts on sourcing both raw materials locally.
She noted further that gross profit margin increased to 37 per cent, Earnings before interest, tax, depreciation and amortization (EBITDA) margin increased to 34.6 per cent and profit before tax margin increased to 29.2 per cent.
According to herm there was a 22 per cent increase in total assets of N30.12 billion. Main driver was cash at the bank which increased by 280 per cent over 2016 due to increased revenue.
She pointed out that after considering the liquidity position and the availability of resources, the directors concluded that there are no significant threats to the company’s going concern capabilities.
Nascon Allied Industries is Nigeria’s leading refiner and distributor of household, food processing and industrial salt with installed production capacity of 567,000 metric tonnes per annum. National Salt Company of Nigeria was established in 1973 and privatized in 1991 with its shares listed on the Nigerian Stock Exchange (NSE) in October 1992, through which Dangote Industries Limited purchased majority shares in the company.