Rating Release
Agusto & Co. affirms the “A-” rating assigned to UAC of Nigeria PLC
The rating expires on 30 June 2023.
Agusto & Co. affirms the “A-” rating assigned to UAC of Nigeria PLC (“UACN”, “the Holding Company” or “the Company”). The rating reflects UACN’s adequate working capital buoyed by its lean operating structure and low leverage. The rating further considers the Company’s diversified portfolio of subsidiaries and associates with strong brands across various sectors of the Nigerian economy as well as its qualified and experienced management team. The rating is however tempered by the high level of intercompany receivables and its impact on the Holding Company’s cash flow position. Also, the rating is constrained by the potential adverse impact of the various macroeconomic headwinds on dividend pay-outs by UACN’s subsidiaries and associate companies amid thinning margins arising from high inflationary pressures and weakening consumer purchasing power. This is in addition to the deteriorating outlook of the global economy, in light of the Russian-Ukraine war and the resultant disruptions to the global supply chain.
The assigned rating is based on our assessment of the financial condition of UACN (the Holding Company) as a separate entity. Agusto & Co. did not appraise the performance of UACN Group, which consists of the Holding Company and seven subsidiaries and associate companies. UAC of Nigeria PLC is the Holding company of UAC Group. The Company has subsidiaries and associates with strong brands across different industries in Nigeria, including animal feeds and other edibles; paints; packaged food and beverages; quick service restaurants; logistics and real estate. UACN generates revenue primarily from dividends from equity investments in portfolio companies, interest income on non-equity investments, rental income on investment properties and management fees.
The opinions expressed in this rating release do not represent any investment or other advice and should therefore not be construed as such. Visit www.agusto.com for further information.