Nigeria’s oldest conglomerate, Unilever, has got off to a sloppy start in 2019 as an industry wide storm hurts the bottom-line of consumer goods firms in Africa’s most populous nation.
Thanks to weak consumer demand which ate into revenues, Unilever had to settle for a 44 percent decline in profit to N1.5 billion in the first quarter of 2019, from N2.7 billion in the first quarter of 2018, according to Q1 figures published by the consumer goods company last week
Despite keeping costs at bay in the first quarter of 2019, a 21 percent slump in revenue proved costly for Unilever. Revenue declined for the first time in 5 years to N19 billion in Q1 2019 from N24 billion in the comparable period of 2018.
Gross profit settled at N3.9 billion, the lowest in eight years, according to data compiled by BusinessDay.
The breakdown of Unilever’s results indicates a 26.9 percent and 13.1% year-on-year contractions in revenue from the Home & Personal Care (HPC) and food products segments respectively.
Analysts attribute the decline in the HPC segment to sustained consumer downgrading to cheaper alternatives as consumer purchasing power wanes.
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Unilever is only one of the many consumer goods companies that appear to be struggling in Nigeria where population growth has now outpaced economic growth four years straight.
While other consumer goods companies are yet to publish Q1 earnings, the trend in 2018 suggests the industry is feeling the strain of low demand for consumables in an economy yet to fully recover from a contraction in 2016.
The industry’s revenue shrank 4 percent in 2018 while costs soared on the back of double digit inflation.
Cadbury, Dangote Flour, Dangote Sugar, Nestle and Nascon performed better in the year 2017 compared to the 2018 financial calendar as the combined revenues of these five companies declined from N600.364 million to N590.73 million at the end of 2018 accounting period.
Costs grew by 7.09 percent if the 27.86 percent fall in Dangote Sugar costs of sales which tracked the corresponding fall in revenues.
Total combined profits dropped by 26.74 percent from 2017 figures of N94.28 million to N69.07 million in 2018.
