In naming 37-year-old Mr. Babasola Aiyesimoju its new Managing Director/CEO, the beleaguered failing octopus, UAC Nigeria Plc. whose fortunes had nosedived in recent years, has employed what industry analyst are calling “desperate measure” to revive itself, or indeed stay in business in the wake of intense competition.
Aiyesimoju’s appointment signals a generational shift; an attempt, perhaps, to tap into the energy of youth in an environment dominated by young people. His choice, analysts say, is most likely informed on the need to have someone who can adapt better in a fast changing business environment; an environment driven by information technologies, given the companies faltering fortunes.
Chairman of the UACN board, Mr Dan Agbor, had noted that the appointment of Mr Aiyesimoju, a finance professional, signified the company’s ambitions, and the board’s determination to accelerate the process of change within the group.
It is a desperately needed change given the company’s recent numbers. “The business environment is gradually evolving into digital. Many things that happen now are driven by social media and digital technology. You see that the global economy is increasingly becoming knowledge based. The dominant firms in today’s world are the digital companies like Amazon, Apple, Facebook and all of that,” says Dr. Adi Bongo, senior lecturer at Lagos Business School.
“There is a generational shift, those who really understand these systems and how to deploy them are the younger people. The young people are the digital natives because they are born into these technologies. So they understand them better than the digital migrants.
“As time goes on, you are likely going to see more younger people being entrusted with such huge responsibilities of managing such big companies. UACN is known for fast Moving Consumer Goods (FMCG), which is a market driven by mainly the youths. The world we live in today is changing at a very rapid rate. And the younger people are more attune with this new reality.”
The new MD replaces Mrs Omolara Elemide who was appointed in acting capacity following the exit of Abdul Bello in December. The task before him is undoubtedly an arduous one.
UAC once ruled the country’s corporate environment. Its products were household names. And importantly, its’ property arm led the way in the once thriving real estate market.
Indeed, in another life, UACN was the most highly capitalized company on the Nigerian Stock Exchange (NSE). If any stock qualified to be called a blue chip, UACN was the bluest of them all; but that was then. In the last two decade the company has unraveled like a poorly baked loaf of bread by plunging into a place reserved for corporate grandees and ancient marinas.
In life, more so in business, changes happen so fast and competitions are intense. From its results in more recent years, it would appear that UACN’s best times are over.
From being the country’s poster blue chip, UACN has seen its fortunes erode fast, apparently outdone by smaller, more innovative competitors in an environment that is fast changing. But obviously, too, by a struggling national economy which accounted for its rising input, finance and operating costs and obviously, low revenue. It is this negative trajectory that the new helmsman is expected to change. And even though he is admittedly equipped with requisite knowledge, it would be a tough task.
“Obviously, it is a huge responsibility he has,” Adi says. “Whether or not he is able to deliver, time will tell.”
Indeed, the company itself doesn’t sound overly confident. When BusinessHallmark contacted Mr. Mike Asuquo, its head of corporate communication on Saturday, he maintained that he would not say anything regarding his expectations of the new helmsman. According to him, the new MD should be in a better position to speak on his plans since he had just been appointed.
The reason for such possible lack of optimism is not far-fetched. UACN’s 2018 report card, like it was the year before, was in the negative. The numbers churned out by the company few days ago showed that things went further south during the year, with the loss led by its hitherto thriving property section, UACN Property Development Company Plc (UPDC).
Revenue generated by the firm dropped to N78.7 billion from N89.2 billion, while it recorded an operating loss of N5.3 billion compared with the operating profit of N7 billion in the previous fiscal year.
The company suffered a loss before tax of N5.5 billion against the profit before tax of N3.3 billion in 2017, while it recorded a loss after tax of N9.5 billion in contrast to the profit after tax of N1.3 billion a year earlier, with the earnings per share closing at -N2.11k in 2018 against 50 kobo of the previous year.
Same in 2017, the company’s group sales of N20.4bn declined -21 percent Year on Year (YoY) while profit before tax fell by c.-88 percent YoY to N202m mainly on account rise in operating expenses to N3.5bn, a -64 percent decline in other income to N756m and a 130 YoY rise in net finance charges.
Yet, it posted a loss of -N561m after tax taxes of –N1.1bn. Sales for the food and beverages segment are now more important to the business. Combined, this segment accounted for c.86% and 83% of group sales in Q4 2017 and FY 2017 respectively.
Perhaps nothing signposts UACN’s struggle more than the real estate arm of the business. As gleaned from the Q3 2018 performance of the UACN Group, the N1.98billion revenue from the real estate segment closed as a loss before tax of 4.529billion.
And it would not be the first time that the hitherto regarded ‘real estate jewel’ of the UACN Group would be posting disappointing results. In the corresponding period in 2017, the total revenue of N3.13billion that it had recorded had also eventually ended up as a loss before tax of N1.90 billion
For many market watchers, the UPDC saga is symptomatic of the contemporary challenges that the firm is faced with. Whether the company will turn around will, of course, depend a lot on how its new young MD interprets his role and clarifies his vision.