NASCON Allied Industries (NASCON) Plc, a subsidiary of Dangote Industries Limited, has continued to witness positive financial growth despite COVID-19 pandemic.
The consumer goods sector, which the company belongs, is among the hardest hit by the economic crisis brought about by the COVID-19 pandemic. The manufacturing sector remains a critical segment and plays an integral role in the development and advancement of the Nigerian economy.
The company has continued to invest in backward integration projects as a strategy to diversify and add more value to both its shareholders and the Nigerian economy. Also, NASCON, is not only a good dividend stock, it also rewards investors in terms of capital appreciation on the Nigerian Stock Exchange (NSE) and has demonstrated a capacity to reward shareholders over a long period of time.
According to Cordros Securities Limited research, NASCON is the biggest players in the Nigerian salt industry, accounting for 60 per cent of market share, respectively, saying, NASCON is the undisputed leader with 78 to 80 per cent in the bulk salt sub-segment.
NASCON’s total installed capacity for salt is 570,000 metric tonnes per annum while the Apapa refinery, located in the Apapa Port of Lagos, has an installed capacity of 275,000 metric tonnes per annum; the Port Harcourt refinery located in the seaport in Rivers State has an installed capacity of 210,000 metric tonnes per annum, and the Oregun plant’s installed capacity stands at 82,000 metric tonnes of salt per annum.
“Between edible and refined salt, the composition of installed capacity is 72kMT and 495kMT respectively. Capacity utilisation for NASCON’s bulk non-refined salt is 70 per cent and about 80 per cent for refined salt, ” Cordros said in its research.
The company, in its half year financial results for the period ended June 30, 2020, posted an impressive performance amidst COVID-19 challenges. NASCON posted a revenue growth of 12 per cent year-on-year (Y-o-Y) from N12.97 billion in H1 2019 to N14.53 billion in H1 2020. Revenue in the West increased by 36 per cent to N2.72 billion in H1 2020. Similarly, revenue in the East grew by 11 per cent to N923 million in H1 2020. Income from the North also rose YoY by five per cent to N9.91 billion in H1 2020.
Gross profit surged double-digit by 65 per cent on the back of the haulage cost reclassification and gross profit margin strengthened by 129 basis points to 40 per cent in H1 2020.
NASCON Allied Industries operating profit rose YoY by 14 per cent from N2.12 billion in H1 2019 to N2.43 billion in H1 2020. The group’s profit before tax grew at a moderate rate YoY by seven per cent from H1 2019 to N2.13 billion to N2.28 billion in H1 2020.
Likewise, profit after tax grew from N1.45 billion in H1 2019 to N1.49 billion in H1 2020 due to a higher effective tax rate. Earnings per share for the period stood at 56 kobo from 54 kobo.
Capital market analysts believed that the growth in revenue was due to the sustained border closure and foreign exchange scarcity, which prevented the penetration of cheap smuggled goods that competed against the company’s market share.
They expected to see the group reclaim more market share given the persistent FX scarcity and the gradual easing of the lockdown.
The managing director, NASCON, Paul Farrer, said the company have proved resilient in the challenging business environment and is strongly focused on capacity growth and increased market penetration.
He disclosed that the company will be leveraging on a number of synergies including improved output in terms of quality, quantity and business efficiency to deliver value for all stakeholders.
Speaking recently, the chairman of the company, Mrs Yemisi Ayeni, said the firm’s adherence to best corporate governance practices has yielded the desired results as revealed in NASCON’s strong performance despite the harsh operating environment, delivering good returns to all stakeholders.
She stated that NASCON Allied Industries is the company to watch out for in the future in terms of performance as it is breaking new grounds while embarking on projects that will enable it to remain a reference point in the food industry.
Ayeni stated that the food processing company will continue to partner the exchange in its drive to ensure that best practices are adopted by listed companies.
It would be recalled that executive director, Commercial, Fatima Aliko Dangote, recently assured the shareholders of good returns on their investments, noting that, the firm was doing so much to enhance their stakes on a consistent basis.
According to her, “we are expanding, we are investing on new refinery for our salt and we are also looking at innovations, we are bringing other products that are going to be launched soon.
“We placed shareholders interest so high because they have actually trusted us, they have invested in our business and as you can see, regardless of our challenges, we are still able to push really hard and declare profits. We have to take our shareholders very seriously so that they can keep trusting us, and by so doing, more people will keep buying our shares and hold us in high regards.”
It would be recalled that, for the year ended December 31, 2019, the outfit gave a dividend of 40 kobo per share, and shareholders expressed satisfaction at the performance and commended NASCON for its prompt payment of dividends
A shareholder, Mrs Bisi Bakare, speaking on behalf of others who attended the annual general meeting virtually, stated that the company is known for taking good care of shareholders through consistent payment of dividends, noting that, despite the harsh operating environment, it still paid a dividend of 40 kobo per share translating to a 57 per cent dividend payout ratio.
Also, a shareholder, Sir Sunny Nwosu, lauded the board and management of NASCON for their ability to declare and pay dividends despite the harsh operating environment which resulted from the Apapa Wharf gridlock and the downturn in national economy. While other companies are lamenting and cutting down on production, he stressed, the firm is paying dividend which is commendable.
He urged NASCON on more market share in the food sector, especially, in the South East and South West regions through carefully selected strategies. He said, if the outfit increases market share in these regions, its revenue will increase and the firm will expand, hence, offering more opportunities.
To him, “the management should expand our customer base to attract more revenue. Develop strategies to penetrate the South East and South West markets. The plants are close to these markets.”