Unilever Nigeria Plc published its second quarter unaudited results for the period ended June 30, 2023, reporting standalone earnings per share of N0.02, same as the corresponding period in 2022 financial year, bringing the half year earnings per share to N0.48 against N0.33 in 2022. The company earnings in the period was impacted by the weaker gross margin and operating loss.
Revenue increased by 27.3% above 13.1% that was recorded in 2022, outperforming market analyst expectations with the positive outturn driven majorly by the strong growth in the Food Products..
Analyst believe price increases in response to continued high input costs amid an improved volume performance drove the strong revenue performance in the quarter under review. On the price increases, it was observed that theirr channel checks reveal that the company raised its prices across its product portfolio by 6.5%. Sequentially, revenue grew by 20.3% on a quarter to quarter basis,
However, gross margin contracted by 21.81ppts to 8.4% compared to 30.2% in 2022, owing to the faster growth in the cost of sales that stood at 67.1%, which outpaced the increase in the revenue.
The higher cost of sales stemmed from (1) revaluation loss (13.4x increase) from foreign-denominated trade payables and (2) restructuring cost (+393.2%) of raw and packaging materials written off due to stoppage of production in the home care category and associated redundancy costs.
Accordingly, the company recorded an operating loss of NGN3.28 billion in the second quarter of 2023, when compared to operating profit of N963.30 million in second quarter of 2022, due to (1) the decline in gross margin, and (2) an impairment loss on trade receivables of N1.40 billion amid lower operating expenses.
Other highlight of the unaudited accounts shows that, net finance cost was positive at N3.45 billion in the quarter owing to an exchange gain of N2.93 billion on its bank account balances in the period amid an 810.9% increase in finance income.
Overall, profit before tax declined by 73.0% to N169.94 million in second quarter of 2023 as gainst N628.28 million in 2022. Following a tax charge of N78.46 million, the company recorded a lower profit after tax of N91.48 million, when compared with N110.37 million in 2022.
Unilever Nigeria Plc. recently announced the repurposing of its portfolio by gradually exiting two categories, Home Care and Skin Cleansing, affecting only 3 brands (OMO, Sunlight and Lux) with the company better poised to drive the rest of its brand portfolio for growth into the future and strengthen business operations with measures to digitize and simplify processes.
