Analysts have expressed their optimism over performance of Unilever Nigeria plc. as the Consumer goods giant prepares to release its Q4 2018 report.
Unilever advised investors and the general public of its closed period which commenced Monday 7 January 2019. In a notice it sent to the Nigerian Stock Exchange (NSE) same Monday, the firm announced that trading of its shares would be on hold till Thursday 24 January, 2019.
‘’Despite the critical environment and weak consumer demand, Unilever delivered an impressive result in 9 months 2018 which was largely driven by one-off income from the disposal of BlueBand Margarine amounting to N2bn, in addition to lower finance charges and mild double digit revenue buoyed by large product portfolio’’ Gbolohan Ologunro an analyst at CSL Stockbrokers told Businessday over the phone.
Gbolahan maintained a positive outlook ahead of the full year report on the back of a strong three quarter result.
‘’For Full-Year 2018 performance, I expect the company to maintain the same momentum as the drivers of 9 months 2018 results are likely to still provide the catalyst for an impressive full year 2018 performance’’ he said.
Another Analyst at Afrinvest, Ayo Ebo explained that given boost in Unilever earnings as a result of N2bn revenue from sales of its Blueband brand, the full year results should be positive as well. However, on a quarterly basis Q4 result would not match the preceding period where the sales was made.
“On a quarterly basis, there should be a decline owing from non-reoccurring income’’ Ayo said.
Unilever Nigeria plc. In its unaudited interim financial report for nine months, published in October of 2018 reported a 10.72 percent growth in revenue which rose from N65.30 bn in 2017 to N72.31bn in corresponding period of 2018.
Similarly, its profit before tax (PBT) surged 94.09 percent which translated to an absolute increase of N6.13bn for the consumer goods firm, as PBT for 9M: 2018 stood at N12.65bn.
Although tax in the nine month period increased astronomically year on year by 67.48 percent fromN1.91bn to N3.21bn, profits grew by almost 100 percent as it surged from N4.83bn to N9.45bn.
The increase in profit can be attributed to N2.24bn other income item, fall in finance cost which fell by 90.26 percent, from N2.82bn to N274.12m and finance income soared by 314 percent from N593.22 m to N2.46bn in the same period.
As a result, the Earnings Per Share (EPS) increased by 38k or 29.69 percent to N1.66 as at 9M:2018.
The strong performance was in spite of Unilever share price shedding 7 percent in the 2018 market rout, which saw the Consumer Goods Index plunge by 25 percent.
Unilever initially enjoyed a price rally in early 2018, gaining 60 percent in barely over two months of trading where it peaked at N64.6. The Consumer goods share then settled for an average of N51-N54 between mid-March and early September before free falling in the latter part of the year where it closed at N37 per share.
At the close trading on Monday, the company’s share price closed 7 percent lower to N33.75 in what may seem a surprising turn of events.
Aluko Paul, an analyst at MBC Securities Limited explained that the trend could have been caused by one of several factors including the general risk-off stance of investors to the Nigerian equities market.
‘’There might have been some insider information as well that some privileged investors have gotten which is not favourable to the stock or it could be that investors forecast a lower dividend payment, not ruling out the fact that general market sentiments can also affect any stock regardless of the financials’’
Unilever Nigeria Plc. a subsidiary of Unilever Overseas Holding B.V and one of the leading Consumer goods. Their product portfolio include and makers of household care products like Close-Up toothpaste, Pepsodent toothpaste, LUX beauty soap, Blue band Margarine, Lipton Yellow label Tea, Rexona, Vaseline lotion and OMO Multi-Active Detergent, to mention a few.
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