Nascon Allied Cuts Forex Losses, Rebuilds Profit to N4.8bn at H1 

Nascon Allied Industries Plc has reduced foreign exchange losses that slashed its profit in the first quarter, lifting after-tax profit from N1.2 billion in the first quarter to N4.8 billion at the half-year.

Net foreign exchange losses of over N3 billion in the first quarter turned to a net gain of over N1 billion in the second quarter, cutting down the half-year net foreign exchange loss position to less than N2 billion.

The salt manufacturing company’s interim financial report for the half year ended June 2024 shows that while foreign exchange losses are no longer a spanner in the works, other operating pressure surfaced in the second quarter.

A slowdown in sales is a major downside in the company’s operating momentum in the second quarter. Sales revenue decelerated from 40 per cent growth in the first quarter to 26 per cent year-on-year to N26.8 billion in the second.

On the other hand, the cost of production accelerated rapidly from a 25 per cent increase in the first quarter to 72.4 per cent in the second quarter.

The shift in production cost from cost-saving in the first quarter to revenue-consuming in the second is the main source of operating pressure facing the company this financial year.

The average cost of producing the naira of sales rose from 53 kobo in the first quarter to over 59 kobo in the second quarter. The encroachment of input costs on revenue caused a drop of 9.5 per cent in gross profit to N10.9 billion in the second quarter, down from an increase of 60.5 per cent in gross profit in the first quarter.

A big boost came from the net foreign exchange gain of over N1 billion in the second quarter compared to the net loss of over N3 billion in the first quarter. That was however insufficient to lift operating results from a downside slope.

Operating profit dropped by nearly 13 per cent to N5.4 billion in the second quarter, better than the 30.3 per cent drop to N1.8 billion in the first quarter.

At N3.6 billion, after-tax profit went down by 13 per cent in the second quarter, a slowdown on the downside from a drop of 25 per cent in the preceding quarter.

The company at half-year shows a turnover of N50.4 billion for Nascon Allied, which is an increase of 32 per cent year-on-year. Production cost grew much faster at 47.9 per cent to N28.4 billion, limiting the increase in gross profit at 16 per cent to N22 billion at the half year.

A net foreign exchange loss of under N2 billion at the half-year and increases in operating expenses led to a drop of 18 per cent in operating profit to N7.2 billion.

The finance income grew from N309 million to N659 million over the review period, shifting the company’s financing position from net finance expenses to net finance income at the end of half-year operations.

The company’s borrowings and leases remain down from N9.8 billion at the end of 2023 to N8.4 billion at the end of half year 2024.

Pre-tax profit amounted to N7.2 billion in the half-year, a drop from N8.6 billion in the same period in 2023.

Also, after-tax profit went down from N5.8 billion to N4.8 billion over the period, a downturn from a top record growth of 151 per cent to N13.7 billion at the end of last year.

Net profit margin dropped from 15.2 per cent in the same period last year to 9.6 per cent at half-year but there was an improvement from 5.2 per cent in the first quarter.

The poor sales and the loss of profit margin led to the company’s declining profit this year

The company earned N3.39 per share in the half-year, dropping from N4.39 per share in the same period in the preceding financial year.