Despite the challenges facing manufacturers in the country, Unilever Nigeria Plc has been able to grow its revenue by 26 percent for the third quarter ended September 30, 2023.
Just as the unaudited financial statement for the period shows that income tax expense affected the company profitability.
Highlight of the result that was released to Nigerian Exchange Limited (NGX), shows that Unilever Nigeria reported a standalone loss per share of 0.19, which is better than 0.39 loss per share that was reported in the same period in 2022. Revenue stood at 81,577 against N64,769 up by 26.0%, Profit before tax up by 937.3%, while profit for the period grew by 579.9%.
The improved profit was driven primarily by the robust revenue growth, majorly by the revenue growth in the Food Products segment. Meanwhile, Market watchers are of the view that higher pricing drove the solid revenue performance in the quarter as findings reveal that the company raised its prices across its product portfolio by16.6%.
Additionally, export sales recorded substantial growth in the quarter by 51.0%, showing the effects of higher foreign exchange. However, on a quarter-on-quarter basis, revenue declined by 7.5% amid consumers; continuous down trading..
Gross margin showed a remarkable improvement, as it surged by 884bps to 23.1% against 14.2% that was recorded in the same period in 2022, owing to the faster growth in revenue,, which outpaced the increase in the cost of sales that was up 17.1% year on year.
According to market analysts, the higher cost of sales was due to a (1) 14.5x increase in revaluation loss related to foreign-denominated payables and (2) 530.1% y/y increase in restructuring costs resulting from the halt in production in the home care category.
The fast Moving Consumer Goods company, achieved positive EBIT and EBITDA margins of 1.6% and 3.8%, respectively, driven by the significant improvement in the gross margin despite a 4.1% year on year rise in operating expenses.
Some stock brokers are of the view that the company could keep its costs in check, evidenced by the substantial improvement in gross and operating margins despite the challenging inflationary conditions in the operating environment.
Pointing out that looking ahead of their fourth quarter result for the period ended December 31, 2023, they expect strong revenue growth due to increased demand driven by festive-induced consumption, which will make the company to end the year positively, given the company’s low leverage and huge cash balance, which offers a cushion to its earnings.
The company’s net finance cost printed N57.38 million in the quarter, compared to net finance income of N101.51 million that was recorded same period in 2022, owing to a 214.6% year on year increase in finance cost, accompanied by a 127.1% year on year growth in finance income. The higher finance costs were due to a substantial 543.6% increase in loan interest during the period.
The Shareholding structure as at 30 September, 2023, shows that Unilever Overseas holds 75.96%. Stanbic Nominees Limited holds 4.39 %, while the Free float is 19.64%. Unilever Nigeria is principally involved in the manufacture and marketing of Foods and refreshments, Home care and Beauty and personal care products.
Some of the products of Unilever Nigeria are, Close-Up (toothpaste), Pepsodent toothpaste, LUX soap, Lifebuoy soap, Rexona, Vaseline lotion and Vaseline Petroleum Jelly,, Lipton Yellow Label Tea and Knorr, among others including OMO and Sunlight detergent.
It has manufacturing sites in Oregun, Lagos State and Agbara, Ogun State its share price as at close of trading on Friday October 20, 2023 was N13.
