Nascon, Cadbury, Unilever, BUA, Utilize Assets Efficiently to Generate Higher Sales

Nascon Allied Industries Plc, Cadbury Nigeria Plc, Unilever Nigeria Plc, and BUA Foods have used their assets to generate higher sales than peer rivals, giving a glimmer of hope for a sector that is beset by foreign exchange revaluation losses.

This means that these companies are using their property plant and equipment effectively, which underscores operating efficiency.

For instance, Nascon Allied generates a sales revenue of N9.85 for each Naira invested in fixed assets; Cadbury, (N8.26); Unilever, (N7.33), and BUA Foods, (N4.14), these ratios are higher than the 4.01 industry average, according to MoneyCentral calculations.

However, Vitafoam’s ratio stood at (N1.820); Nestle Nigeria, (N3.27); Nigerian Breweries, (N2.22); Guinness Nigeria, (N2.48); International Breweries, (N1.31); HoneyWell, (N3.56); Champion Breweries, (N1.44), and Dangote Sugar Refinery, (N1.70), all below the industry average.

MoneyCentral uses the fixed asset turnover ratio to do the analysis.

The fixed asset turnover (FAT) is one of the efficiency ratios that can help you assess a company’s operational efficiency. This metric analyzes a company’s ability to generate sales through fixed assets, also known as property, plant, and equipment (PP&E).

Companies in the consumer goods sector have overcome the challenging macroeconomic environment through price adjustments, increasing volume, and expanding their capacities.

The 12 largest consumer goods firms collectively generated N5.60 trillion a as at December 2024, which is 56.44 percent higher than N3.60 trillion, according to data gathered by MoneyCentral.

However, high inflation, volatile exchange rates, and rising borrowing costs as well as escalating raw material costs and currency devaluation prevented top line impressive performance from translating into bottom-line growth.

Margin suppression due to huge losses after tax means zero price to earnings ratio while most of these firms were unable to pay dividends to their shareholders.

Investors are sanguine that sector players will surmount the current challenges as they are snapping up shares.

Unilever’s shares have gained (+16.69 percent); Nestle Nigeria (+11.43 percent); HoneyWell, (+ 90.48 percent); PZ Cussons (+52.67 percent);Dangote Sugar (+10.77 percent); Nascon Allied, (+40.35 percent), and BUA Foods 0.72 percent.

However, Guinness and International Breweries have a negative returns of -13.59 percent and 0.26 percent respectively.

“The Nigerian consumer goods sector is expected to remain resilient, posting double-digit topline growth, driven by continued price adjustments and strategic capacity expansions,’ said analysts at Meristem Securities.

“While elevated prices for goods will support revenue growth, the sector will still face ongoing cost pressures from rising raw material prices. However, we anticipate a moderation in the impact of currency depreciation on finance costs, as the rate of Naira devaluation is unlikely to reach the levels seen in 2024,” summed analysts at Meristem Securities.

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