NASCON Allied Industries Q3 2022 Result Indicates Growth Performance

NASCON Allied Industries (NASCON) Plc, a subsidiary of Dangote Industries Limited, has shown growth performance in its nine months financial results for the period ended September 30, 2022.

The company has continued to invest in backward integration projects as a plan to diversify and add more value to both its shareholders as well as the Nigerian economy.

NASCON, as a company is not only a good dividend stock, it also rewards investors in terms of capital appreciation on the Nigerian Exchange (NGX) and has demonstrated a capacity to reward shareholders over a long period of time.

The company posted  revenue of  N40.61 billion  in nine months ended September 2022, representing a 62.8 per cent increase from N24.9 billion recorded in the corresponding period of 2021.

The increase was driven by the price increases instituted across NASCON’s salt products. Across its business regions, revenue from the North grew by 71.2 per cent of total revenue, remained the largest contributor to the total sales outturn, growing by 196.0 per cent year-on-year; while revenue from the Western increased by 14.6 per cent Y-o-Y and Eastern rose by 54.2 per cent Y-o-Y; regions maintained the momentum witnessed so far in 2022.

Cost of sales rose by 68.2 per cent to N25.142 billion as against N14.947 billion in 2021, while gross profit rose by 54.6 per cent in Q3, 2021 from N10.001 billion to N15.463 billion in Q3, 2022.

Operating profit stood at N4.487 billion, higher than N3.613 billion achieved in the preceding year of 2021. Profit before tax rose by 20.2 per cent to N4.270 billion from N3.552 billion, while profit after tax also increased by 19.3 per cent to N2.882 billion compared to N2.416 billion in Q3, 2021.

Analysts at Cordros Capital, pointed out that NASCON’s Q3, 2022 result highlights the company’s resilience since the turn of the year despite the weak operating environment and intense competition from Royal Salt in the retail segment.

The  food producer also maintained margins at high levels despite the strong headwinds in the year. Considering the resilience witnessed so far in 2022, they expected the company to see out the year positively, maintaining robust expansions in its top and bottom lines.

“Nonetheless, over the medium term, we remain cautious about NASCON’s ability to maintain the pace of growth as we still see little scope for volume expansion in both the seasoning and salt segments. Following the revisions to our estimates, we raise our target price to N19.09 per share and revise our rating on the stock upwards to a BUY,” Analysts at Cordros Capital emphasized.

The chairperson of NASCON, Yemisi Ayeni while speaking recently at the company’s Annual General Meeting (AGM), said: “we believe that mainstreaming sustainable business practices would enable us to drive our long-term corporate success. We are therefore integrating sustainability principles and standards at the core of our business operations, and building the required structures that would enable us to remain relevant today and in the future.”

Ayeni affirmed that “NASCON aligns with the Dangote Group’s seven Sustainability Pillars (The Dangote Way), which outline how we would run a purpose driven business that pays close attention to the triple-bottom-line issues of people, planet and profit.

“While sustainable profit will always be a key reason for us being in business, we understand that our people are the greatest assets that would drive these bottom-line objectives. We must therefore ensure their wellbeing, safety, satisfaction and productivity.

“We are also strongly committed to our environmental responsibility and the need to continuously consider the wellbeing of the planet (including CO2 emissions, energy consumption, waste management and recycling) as we make critical business decisions.”

According to her “We redefined our commitment to international best practices as we prioritized the United Nations Sustainable Development Goals (UN SDGs) that align most with our business goals and sustainability objectives.

“We are also solidifying our commitment to ethical labour practices, protecting human rights, driving environmental sustainability and anti-corruption; all of which are underlying principles of the United Nations Global Compact (UNGC), which our parent company, Dangote Industries Limited, is a signatory to.

“We are glad to have achieved our first sustainability report in accordance with GRI Sustainability Reporting Standards having published a GRI referenced report in the past, giving us a good opportunity to begin to disclose our environmental and social stewardship to our esteemed investors and other stakeholders, annually.

“As we progress in our sustainability journey, we will ensure continual improvement in health and safety, community engagement and social investments, as our way of building a sustainable brand.”

On his part, Thabo Mabe, the acting managing director of NASCON, said despite the diverse challenges, the company will continue to demonstrate its resilience and optimism.

Mabe said “we are focused on maximising the gains from our capacity expansion, human capital development, operational efficiency and aggressive trade in all market segments.”

NASCON was established as a salt refinery at Ijoko, Ogun State in 1973, in a joint venture between the Federal Military Government of Nigeria and Atlantic Salt & Chemical Inc. of Los Angeles, California, USA. The Company was privatised in 1991 with its shares listed on the Nigerian Stock Exchange in October 1992, through which Dangote Industries Limited purchased majority shares. Following the reverse takeover of NASCON by Dangote Salt Limited (DSL) in 2007, NASCON acquired the assets, liabilities and business undertakings of DSL.

NASCON’s principal activities include processing of raw salt into refined, edible and industrial salt. The company is also into the production of seasoning and vegetable oil.