Unilever Nigeria Posts N3.4bn Profit in First Quarter
Unilever Nigeria Plc grew its net profit by 39.6% year on year to N3.4 billion, driven primarily by strong revenue across various product segments and a higher finance income during the quarter from N2.407 billion in Q1-2023.
The company reported a 57.8% year on year growth in top-line, following stronger revenue accretion across its product segments during the quarter, according to analysts.
Specifically, the personal are and beauty & wellbeing line surged by 97.8% and food products grew by +36.4%. The growth recorded at the segments accounted for 43.7% and 56.3% of total revenue for the period, respectively.
Due to tough macroeconomic condition and increase rivalry, Unilever Nigeria discontinued the Home Care product line in September 2023 and split the Personal Care and Beauty & Wellbeing lines into two separate segments at the beginning of the year.
Its unaudited results showed that the company’s cost of sales increased by 75.0% year on year, largely due to the higher cost of raw materials.
Interestingly, the company recorded a revaluation gain of N1.18 billion arising from foreign currency-denominated balances related to deposits for imports of raw materials, which lowered the cost of sales amount.
Consequently, the gross profit margin declined to 41.8% from 47.5% in Q1-2023.
Its operating expenses rose by 100.7% year on year in the period, a consequence of about 435% year on year increase in marketing expenses. Its overheads also rose by +52.8% year on year.
This resulted in a decline in the operating profit by 17.5%. Meanwhile, the company recorded a net finance income of N516.3 million versus net finance cost of N159.9 million in Q1-2023.
Analysts said this was driven by a significant foreign exchange gains in the bank balances and higher interest on call deposits and bank accounts. This masked the surge in interest paid on third-party bank loans.
At the end of the period, Unilever Nigeria pre-tax profit moderated to 3.1% year on year. Further down, the 40.2% decline in the tax charge for the period helped to keep the company’s bottom line above water, CardinalStone Securities Limited said in its review..
Unilever Nigeria divestment from the homecare business category, following a strategic decision to place greater focus on its margin-accretive products, eased further bottom-line pressure. As a result, EPS grew by 18.4% year on year to N0.58.
The company’s net cash balance decreased by 21.3% YoY to N38.9 billion, nudged by increased advances and prepayments made to leverage favourable pricing opportunities for raw and packaging material needs.
