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uacn plc, Nigeria’s oldest conglomerate, on Wednesday held its Annual general Meting. Its Group Managing director, Mr. Larry Ettah told Godwin Ijediogor that its current 70% growth is only the beginning of better things to come.
PERSONALITY
Can you compare your 2006 and 2007 results?
In terms of turnover, we have achieved what I would call double-digit growth. In 2006, compared to 2005, we had 4.6% growth, but in 2007, we doubled the growth rate to about 11%, which is very significant.
In terms of operating profit level, we have grown the business by 40%. This is a very competitive set of results. Looking at dividend per share, we have moved from N1 in 2006 to N1.70K in 2007, which is a 70% growth. In terms of earning per share before extra-ordinary items, it is also a very huge growth that we have recorded.
So on all matrix of performance, we have recorded very competitive sets of results and we are quite pleased about this because it validates the strategies. Though early, it goes to show that the business model we are putting in place is working and our agenda for shareholder value creation is moving in the right direction.
What is the magic?
I think that clearly, we have put in anew structure; strategy and business model, and have a better approach to execution. Part of the mandate we have got in uacn currently is to reform and modernise the company by putting new systems and processes and I am happy to say that I have significant alignment with the people working with me, in terms of ensuring that these results are achieved.
Are you happy with the level of share capital?
In terms of the share prices currently, I think there is still an upside potential. I have read three very well researched reports from both local and international organisations that reflect that there are a still significant values to unlock in uacn.
As at today, if you look at our earnings, we should be trading at between N62 and N65, with our results. So if we are operating at about N50 in the stock market, there is still a significant upside potential. If you look at the company’s earnings, in terms of fundamentals, it is pretty strong. So uacn share should be trading higher than it is at the moment.
Do you see it hitting that mark soon?
I see it surpassing that soon, because looking at our first quarter result, it is an indication of what is going to happen in 2008. We take comfort in the fact that in the first quarter result, we have grown our turnover by about 22%, compared to 11% in 2007. So we have doubled again in the first quarter of this year.
In terms of operating profit, we have moved from 40 to 50% growth. That is an indication significantly that there is a lot of momentum in the company.
Where does re-branding come in here?
It was important that the new uacn that we are trying to create is different from the old-fashioned uacn, which some people saw as a mediocre company and sprawling conglomerate. It is going to be a much more audacious, youthful and modern company; one that dominates any field it chooses to play.
It was also important that we brought some symbolism to meet with the substance; the transformation that was happening in the business.
In terms of portfolio, we are becoming a much more food-focused conglomerate, so we needed certain symbols to reflect that, part of which was the re-branding that took place not long ago.
Beyond the logo change and all that, it was also important to recognise that in that transformation, much as we are saying that it is the same book, it is a new chapter that we are writing in which we are recognising certain aspects of our past that would be relevant in our future.
In that new chapter, we are saying that this uacn would be more a hunter than the hunted; a predator than the prey. uacn would significantly have leading market positions in whatever field it is playing.
Being food-focused, is it that you have identified that as your area of strength?
It is largely a combination of what we see as the favourable trends going forward, in terms of the economy and our competence as an organisation. If you look at the contributions from other businesses, you would discover that the food aspect is very strong. So we believe that it is important to give that aspect of our business skill and scope and as much as possible begin to have the necessary investments to support the growth that we see going forward.
One of the things in corporate strategy is that you need to align your human and capital resources towards an area of focus to ensure that you grow in quantum more than you would have if you remain diffused or diversified.
What is the position of uacn vis a vis bonus shares?
We had our Annual General Meeting (AGM) on Wednesday and some of our shareholders did ask this question. Certainly, we want to grow dividend and one of the things we have done is to first of all grow our earnings per share. If you are going to grow bonus, which is a diffusion of your outstanding shares, you must have strong earnings per share to be able to cover the bonus.
I think we are beginning to approach that stage in our life circle and I guess we would be looking at that at the right time. Suffice to say that for now, it is important to grow the earning per share and dividend of this business, which comes from the operational results that the business is going to post.
So we are managing significantly the best business at the moment. But I guess it is a debate and discussion we should be having.
Are you comfortable with the capital base of uacn at the moment?
As it is, yes, because in 2004, we went to the capital market when we needed to restructure our balance sheet, and injection of equity to be able to address the huge borrowing cost that we had.
At the moment, I think we had the right level of share capital, got a solid balance sheet, made good use of our cash flow and generally had a strong operating performance.
We believe we can fund part of the investment and opportunities that we see available from our internally generated cash and recognise that we can at some point release certain assets to give us the leeway to embrace other businesses and investment opportunities going forward.
We also need to take in some level of leverage to run our business which we are doing currently.
It would appear that turnover from the franchise is not part of the overall turnover?
Yes, because it is third-party turnover. That is why when you look at business like ours, it is important you understand the levers of that business, of which franchising is significant aspect of the growth we are experiencing. So when you look at the system-wide turnover, it is huge than what we are seeing in terms of the group turnover which discounts for the third-party or franchise turnover. But then, we do get profit from the franchise operation, which reflects in our operating profit.
How long do you think this growth would last?
I believe that for us it is the beginning of things (the growth) that would continue. For the next three years, for the short term, we forecast a top line growth of about 25% on the average year on year. We also hope to see an operating profit growth of about 35% year on year and the same figure for earning per share.
We are very confident because we are taking significant steps in investing in capacity, innovations and new products, as well as improving our systems and processes. So there are new engines of growth created in the business and to that extent, we are quite optimistic of an interesting story about this company gong forward.
How does it feel being on top of it all?
For me, it represents a great opportunity to shepherd a business with great history and pedigree and in so doing, give it a new lease of life, modernise and reform the business.
I see myself as a steward, an operator, a catalyst and also a strategist. I count myself lucky to be surrounded by equally very passionate, committed and resourceful young men and women who are also working to ensure that this change we initiated succeeds.
My role is really to give the organisation a vision of new possibilities and people the confidence that what they might think impossible is possible when we begin to believe it is possible. And that is exactly what I am doing at uacn.
UACN seems to be gradually going towards the productive sector. What do you hope to achieve by that?
That is so because we believe that an economy of about 140 million people, with relatively not strong growth over time, needs to industrialise, ensure production to feed the people and generate employment.
We believe the real sector would be the driving force of this economy, whether we like it or not, and uacn has to be a prominent player in the development of that sector. That is why we are investing in manufacturing, retail and real estate businesses to remain an enduring icon in this country.
Being food-focused, how do you see the group faring in the near future?
It would be relevant because as the population grows, the more we would have to feed them, especially the middle class that would need our restaurants, poultry feed inputs, fish feed and our Spring and Gossy Water brands, for instance.
Because we have been here all the way, we know the lay of the land and understand the dynamics of this market, we are in a better position to succeed than most other people.
What do you say to the public and your shareholders as you continue in your strides.
To our shareholders, I would say they haven’t seen anything yet. The growth we have seen in 2007 is just what I call starters; the main course is coming.
To the public, they should become much more engaged in the company by availing themselves of the opportunity of belonging to this commonwealth called uacn. They will be wiser for it because this is one company that will make a lot more Nigerians richer in the future, especially those who are not yet shareholders, in terms of employment, capacity to become entrepreneurs through our franchise chain or its corporate social responsibility. |
