• Thursday, March 28, 2024
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Here is how Unilever hits first profit in three years

Here is how Unilever hits first profit in three years

Unilever Nigeria, one of the major players in Nigeria’s fast-moving consumer goods space, has bounced back to profitability in 2021 after two years of consecutive losses as improved sales helped boost bottom-line figures.

Unilever made a profit of N3.48 billion in the full-year period of 2021 compared to a loss of N3.96 billion recorded in 2020, according to the company’s unaudited interim financial statements for the year ended 31 December 2021.

The firm’s profit was boosted by a 35 percent increase in sales to N70.5 billion, up from N52.2 billion in the full-year period of 2020.

Cost of sales grew 22.8 percent to N50.5 billion from N41.1 billion in the periods under review. However, the increase in sales pushed gross profit up by 80.9 percent to N19.9 billion compared to N11 billion in 2020.

While the company seems to have returned back to profitability, the company’s performance was impacted by foreign exchange risk, credit risk and liquidity risk.

“Unilever is exposed to foreign exchange risk arising from various currency exposures. The currencies in which these transactions are primarily denominated are US dollars, Pound sterling, Euro and Rand. The currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates,” the company said in its financial statement.

However, the Company stated that it manages this risk mainly by hedging foreign exchange currency contracts.

Even with the recovery, Unilever is yet to reach its record 2018 levels when it recorded a profit of N10.5 billion.

Read also: Flour Mills grew nine-month profit by 9.6% with record revenue

Further, analysis of the country’s financial statement shows that net finance income tumbled 69 percent to N460 million from N1.48 billion in 2020 driven largely by a 63 percent decline in finance costs.

On the other hand, finance costs declined 37.4 percent to N219 million from N350 million in 2020.

The consumer goods maker spent more on selling and distribution as the expense grew 38 percent to N3.31 billion compared to N2.39 billion in periods under review.

Also, marketing and promotion as the expense jumped 35 percent to N14.6 billion from the previous year.

Other income fell 43 percent to N37.3 million in 2021 compared to N66 million recorded in the full-year period of 2020.

Unilever’s tax dropped to N363 million, down from N4.41 billion in the year before.

The company’s impairment loss on trade and intercompany receivables declined to N362 million from N3.77 billion in the full-year period of 2020.

Unilever’s tax also rose 273 percent to N401 million, up from N107.5 million in the year before.

Earnings per share (EPS) grew to N0.23 per share from N0.00 per share in 2020.

Unilever Nigeria Plc manufactures and markets consumer products primarily in the home, personal care and foods categories. The Company sells products such as Omo washing powder, Key soap, Royco bouillon, Lipton tea, Blue Band margarine, Pears baby care goods, Vaseline petroleum jelly, Lux soap, and Close Up toothpaste.