NASCON Nets N5.34bn 2017 Profit, Offers N1.50 Dividend, Despite 133% Tax Expense Rise

The board of NASCON Allied Products, a member of the Dangote Group, on Friday presented its performance scorecard for the year ended December 31, 2017, showing that despite a 133% rise in tax expense and a 47.95% growth in sales revenue, profit growth was double digits, following which the directors offered an equally double digit increase in dividend.
The company, which is 62.19% owned by Dangote Industries Limited, has recommended a dividend of N1.50 per share, up from the previous 70 kobo per share from Earnings Per 50 kobo Share of N2.02 and 91 kobo respectively for the period under review.
Revenue for the period rose by N8.772bn or 47.95% to N27.064bn from N18.291bn, of which N23.205bn, up from N15.855bn was realized from the sale of edible refined, bulk, industrial salt, seasoning and vegetable oil; while the remaining N3.858bn, as against N2.435bn came from freighting services offered to customers by way of transporting sale and vegetable oil purchased to their destinations.
A further breakdown showed that salt remained the biggest contributor to revenue and sales costs, amounting N22.247bn and N11.62bn, leaving a segment profit of N10.627bn; followed by freight income of N3.858bn, cost of N4.442bn, resulting in a N583.36m loss for the period; just as season earned N765.295m and cost N639.564m, while profit came to N125.732m; while company earned nothing from tomato paste, but spent N32.84m as cost of sales and therefore a loss.
Cost of sales increased to N17.07bn from N12.374bn in prior year, representing an increase of N4.696bn or 37.95%; with direct material cost of N10.148bn from N7.231bn; direct labour cost, N886.686m from N822.45m; external haulage amounting to N3.285bn, up from N2.535bn. Depreciation cost rose to N1.471bn from N767.389m; loading cost was flat at N107.438m from N108.048m; while manufacturing expenses increased from N909.578m to N1.17bn. These left gross profit of N9.994bn, as against the previous N5.917bn.
Other income dropped to N11.296m from N18.484m; distribution costs slowed down to N604.718m from N638.189m; while administrative expenses rose to N1.773bn from N1.479bn, resulting in operating profit of N7.626bn, compared to N3.818bn in 2016.
Investment income for the year ballooned to N354.745m from N55.328m, an increase of about N299.417m or 541.16%, the bulk of which was from fixed deposit of N309.776m, as against N54.988m in 2016; treasury bills, N44.298m.
Management significantly drove down finance costs, principally the interest on borrowings by N285.558m or 79.83% from N354.671m in 2016 to N72.113m.
Profit before tax for the period therefore grew by N4.393m or 124.93% to N7.909m, up from N3.516bn; while tax expenses increased by N1.464bn or 133.02% to N2.565bn, compared with the previous N1.101bn. Net profit also jumped by N2.928bn or 121.24% from N2.415bn in the preceding year, to N5.343bn.
Also, Deloitte & Touche, the company’s external auditors highlight in its report the vegetable oil and tomato paste plants commissioned in 2015, but have remained idle since early 2016 due to the inability of the company to get raw material as a result of the government’s legislation on import material that are not eligible for foreign exchange.
The report signed by Ijeoma Onwu, a partner in Deloittte & Touche, dated March 8, therefore identified the impairment of both plants “as matters requiring significant audit attention due to the possibility of the carrying value of the plants exceeding the recoverable value.”