WED MARCH 05 2025-theGBJournal| NASCON Allied Industries Plc (NASCON) sustained profitability and delivered earnings growth despite the challenging macroeconomic environment.
Cordros Research say they expect NASCON to remain profitable in 2025E, driven by robust revenue growth fueled by strategic pricing and volume expansion through market penetration efforts.
The salt refining heavyweight, reported profit before tax of N23.65 billion in 2024FY, 14.9% y/y increase from 2023FY (N20.59 billion), and following a tax expense of N8.07 billion, profit after tax (+13.5% y/y) printed at N15.58 billion in 2024FY (2023FY: NG13.73 billion).
Full year EPS grew 11.4% y/y to N5.77 (2023FY: N5.18). The outturn was driven by the marked revenue growth (+48.9% y/y) recorded in the period.
The company has announced a final dividend of N2.00/share, representing a dividend yield of 4.8% based on the closing price of N41.80/share (4 March).
Meanwhile, Revenue grew by 48.9% y/y in 2024FY, driven by the growth from the Salt (+49.4% y/y | 93.8% of revenue) and Seasoning (+41.8% y/y | 6.2% of revenue) business segments.
The Northern region (+50.6% y/y) remained NASCON’s core market with the highest revenue growth, with the Western (+44.4% y/y) and Eastern (+44.1% y/y) regions also sustaining their strong growth momentum, attributed to strategic price increases across the company’s product portfolio as well as aggressive volume drive.
Gross margin declined by 871bps y/y to 46.1% due to the faster pace of growth in cost of sales (+77.7% y/y) to revenue growth (+48.9% y/y).
The growth in the cost of sales was driven primarily by the 78.1% y/y increase in the cost of raw materials (86.2% of COGS) and Manufacturing expenses (+108.3% | 9.0% of COGS) reflecting higher commodity prices, weaker currency, higher energy prices amid the highly inflationary environment.
Consequently, the EBITDA (-808bps y/y) and EBIT (-696bps y/y) margins contracted to 20.8% and 19.1%, respectively amid a 29.2% y/y increase in operating expenses.
The company recorded a net finance income of N613.26 million (vs a net finance cost of N507.81 million in 2023FY).
The print was supported by a 93.4% y/y increase in interest income amid a 17.7% y/y decline in interest expenses (+106.6% y/y).
We highlight that the decrease in finance costs was driven by a 22.7% y/y decline in interest on borrowings and a 5.0% y/y decline in interest on leases.
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