THE COMPANY: The National Salt Company of Nigeria (NASCON), a subsidiary of Dangote Group, is involved in the refining and packaging of table salt, industrial salt and agricultural salts in Nigeria. NASCON was established in 1971 and, after many years of poor performance, the company began to recover following its acquisition by Dangote Industries (a member of the Dangote Group) in January 2007. The new owner improved the company’s productive assets, placing them in favourable and competitive locations, and increasing production capacity to 400,000 tonnes. This has allowed NASCON to take 60% of the market share of its products. The company has since continued to sustain impressive and improving operations over the years. The company listed on the Nigerian Stock Exchange in 1992 under the consumer goods sector and food product sub-sector on the main board. The company has 2.65bn shares outstanding, translating to N34.31bn ($216.2m).

2013 RESULTS: The company’s Q1 2013 results were indicative of the harsh operating environment, as revenues saw a decline of 24.63% to N2.78bn ($17.5m) from the N3.69bn ($23.2m) declared in Q1 2012. However, in fiscal year (FY) 2012, turnover and profit after tax saw increases of 30% and 26.94%, respectively, to N13.14bn ($82.8m) and N2.77bn ($17.5m).

This improvement reflected the efforts of the company, in response to the difficulties experienced in the year. This led to a stronger and more profitable business compared to the preceding year. Gross profit for the period eased slightly by 0.88% to N1.24bn ($7.8m), compared to N1.26bn ($7.9m) recorded the previous year. Investing income of the company also slowed to N50.68m ($319,284), reflecting a 4.51% decline from 2012. Amidst the decline in revenue, the cost of sales in Q1 2013 depreciated by 36.90% to N1.54bn ($9.7m) when compared to Q1 2012.

In assessing the return of the company, profit before tax and profit after tax stood at N1.01bn ($6.36m) and N686.9m ($4.33m), respectively, a 0.60% and 0.59% increase when compared to the results of the previous year. Earnings per share for FY2012 stood at N1.04 ($0.0066). The company rewarded its shareholders with a dividend of N0.90 ($0.0057) per share, translating to a payout ratio of 86.19%, a performance applauded by the shareholders, who saw the presentation as commendable given the harsh operating environment. In FY2012 shareholders’ equity stood at N6.58bn ($41.45m), translating to a book value of N2.48 ($0.016). However, in Q1 2013, the company was able to grow its net asset base by 10.45% to N7.26bn ($44.29m), increasing the book value per share by the same percentage to stand at N2.74 ($0.017). The shares price of the company remains highly over priced, as it is currently trading at N12.95 ($0.082), depicting a price to book value at 4.72x.

The company’s financial position indicated impressive valuations, as total assets and fixed assets saw 12.76% and 28.77% growth, respectively, to N12.05bn ($75.9m) and N4.69bn ($29.55m). Trade and other receivables posted N2.09bn ($13.17m) in Q1 2013, reflecting a percentage growth of 4.29% on the previous year. Reviewing the liquidity point of the company, N622.93m ($3.9m) was added to its cash and bank balances, which reached N4.69bn ($29.55m), up from N4.07bn ($25.64m) in Q1 2012. Total current assets came in at N7.34bn ($46.24m), while borrowings, differed tax liabilities and bank overdraft remained flat at N38.57m ($242,991), N180m ($1.13m) and N5.24m ($31,012), respectively.

DEVELOPMENT STRATEGY: A global salt shortage in 2012 led to a notable reduction in the company’s imports. However, NASCON remained committed to sustaining its competitiveness and increasing dividends to shareholders. The company continues to indicate its commitment to maintaining its leadership position in the salt industry by working continuously to achieve strong diversification. This will be achieved through the creation of a food seasoning business, and by venturing into vegetable oil refining.