UACN bets on long-term gains as dividend strategy prioritizes value creation

Despite more than doubling its pre-tax profits in full year 2024, UAC of Nigeria Plc is maintaining a flat dividend payout — a move that signals the company’s pivot toward long-term value creation over short-term investor appeasement.

The conglomerate posted a 107 percent jump in profit before tax to N26 billion on the back of robust operational performance and strategic discipline. Adjusted for one-off gains, UACN’s operating profit grew ninefold — a rare feat in Nigeria’s inflation-squeezed business environment.

Yet, against soaring earnings, the company held its dividend steady at 22 kobo per share. For some investors, this may seem like a missed opportunity for greater cash returns. But the firm’s leadership frames the decision as a strategic one, reflecting a clear-eyed commitment to building sustainable shareholder value.

“The decision to recommend 22 kobo was not made lightly,” said Fola Aiyesimoju, UACN’s group managing director. “We are invested in the long-term success of the company. Our incentive structure is tied to shareholder returns, so we make decisions that protect value — even if those decisions may be unpopular in the short term.”

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This conservative cash deployment stands out in a market often driven by quarterly optics. UACN is choosing to prioritize financial flexibility amid Nigeria’s macroeconomic headwinds — including currency volatility, high inflation, and inconsistent consumer demand. In this context, preserving capital becomes a hedge, not a retreat.

The company’s performance across segments supports its case. Revenue in its Packaged Food and Beverages division grew 102 percent, while Animal Feeds & Edibles and Paints segments saw 54 percent and 52 percent increases respectively — all while maintaining margin discipline.

The company’s strategy is already paying off as it delivered a 323 percent total shareholder return between 2020 and 2024 — outperforming the Nigerian Stock Exchange’s 283 percent return over the same period.

UACN’s approach to interim dividends further underscores its flexible, opportunity-driven capital strategy. “If executed well, we are confident that higher and more consistent dividends can be sustained over time,” Aiyesimoju noted.