The earnings of Unilever Nigeria Plc, one of the oldest manufacturers in the country, rose almost 12-fold in the second quarter of 2024 after its exit from homecare business.
According to the fast-moving consumer goods firm’s latest financial statement, its after-tax profit rose by 1,081 percent to N1.08 billion in Q2 from N91.5 million in the same period of 2023.
The manufacturer’s first-half profit also jumped to N4.44 billion from N2.76 billion in the same period of last year.
“On March 17, 2023, Unilever announced its intention to exit the home care business categories in Nigeria. The company exited the homecare business category in September 2023. All production of home care products ceased in June 2023 and sales ceased in September 2023, following a strategic decision to place greater focus on the company’s margin accretive products,” the firm said in a statement.
It said the business categories have been evaluated by management for reporting in line with IFRS 5, non-current assets held for Sale, and discontinued operations and that the home care segment does not meet the requirement for a disposal group or is held for sale, as the assets were not sold but leased out.
“However, it represents a separate major line of business and has been reported as discontinued operations. The home care segment was not previously classified as a discontinued operation. The comparative statement of profit or loss and OCI has been re-presented to show the discontinued operation separately from continuing operations,” the statement added.
Further analysis shows that manufacturers’ revenue grew to N31.6 billion in Q2 from N24.8 billion in the same period of 2023. The cost of sales, however, dipped to N18.9 billion from N21.5 billion during the period reviewed.
Read also: Unilever Nigeria’s first-half earnings rise 61%, hits N4.4bn
“We are pleased with our commitment to stay in Nigeria as the longest-serving manufacturing company in the country. As a company that has stayed over a centenary in Nigeria, we are not just here to stay, but we are very convinced that the opportunities in Nigeria are more than the challenges,” Tim Kleinebenne, managing director of Unilever Nigeria, said.
“Our H1 unaudited results with a topline growth at 41 percent, is a testament that with our Growth Action Plan, we are committed to serving consumers with our best brands to meet their daily needs of improved health and hygiene.
“Unilever Nigeria is pleased with its performance progress riding on the pillars of operational efficiency, cost optimisation, purposeful brands, and increasing market share across key categories,” he stated.
The strong revenue performance was likely fueled by price increases in response to high input costs and improved volume performance, according to analysts at Cordros Research.
“According to our channel checks, the company raised its prices across its product portfolio by c. 9.7 percent. However, revenue declined by 2.2 percent quarter-on-quarter, due to decreased sales in beauty & wellbeing (-13.5 percent quarter-on-quarter) and personal care (-9.9 percent quarter-on-quarter) segments. In contrast, the food products segment saw a 4.2 percent quarter-on-quarter increase,” they said.
“Unilever’s operating performance in Q2 reflects a challenging environment. Despite strong revenue growth, the company faced significant strain from elevated operating expenses, driven by naira devaluation and inflation, which led to an operating loss. However, it was lower compared to the previous period. The high tax expenses further exacerbated the impact on profitability,” they said in a note on Tuesday.
The firm’s revenue grew to N63.9 billion in H1 from N45.4 billion in H1 last year. Its personal care segment contributed the largest N22.2 billion to the total revenue while food products, beauty, and well-being recorded N37.1 billion and N4.58 billion respectively.
Selling and distribution expenses surged to N2.7 billion from N1.79 billion while marketing and administrative expenses grew to N16.9 billion from N6.47 billion.
Earnings per share for profit attributable to equity holders increased to N0.77 per share from N0.71 per share.
In May, Unilever, appointed two new independent non-executive directors and a chairman to its board of directors.
A statement by the firm said Ngozi Edozien was appointed as the new independent non-executive director, and Bolaji Balogun was appointed as the new independent non-executive director and chairman, effective May 16, 2024.
Unilever is a supplier of beauty and wellbeing, personal care, home, nutrition, and ice cream products, with sales in over 190 countries and products used by 3.4 billion people every day.
It is a locally listed business that has been operating for 100 years selling brands such as Knorr, Royco, Vaseline, Pepsodent, and Closeup.
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