Agusto & Co. affirms the “A-” rating assigned to UAC Foods Limited
The rating expires on 30 June 2023.
Agusto & Co. affirms the “A-” rating assigned to UAC Foods Limited (“UAC Foods”, “UFL”, or “the Company”). The rating reflects our opinion on the Company’s improving route-to-market strategy, buoyed by its expanding production capacity and extensive distribution network. The rating is further strengthened by UFL’s strong brand presence, low leverage, qualified and experienced management team and the solid financial support it enjoys from its holding Company – UAC of Nigeria Plc. However, the rating is constrained by the Company’s shrinking profit margins due to rising input costs exacerbated by the Russia-Ukraine war, as well as increasing energy prices resulting in higher operating and distribution costs. We also considered the adverse effects of the weak macroeconomic environment on consumer discretionary spending in assigning the rating.
UAC Foods Limited is a dominant player in the packaged snacks, dairy and beverage segments of the Nigerian Food & Beverage industry. The Company currently operates as a wholly owned subsidiary of UAC of Nigeria Plc (UACN), following the conclusion of the agreement to acquire Tiger Brands Limited’s minority stake in UFL by UACN in September 2021. UFL markets its products under four famous brands in Nigeria through an extensive network of over 400 distributors and its online e-commerce platform.
The opinions expressed in this rating release do not represent investment or other advice and should therefore not be construed as such. Visit www.agusto.com for further information.”