Unilever Nigeria has seen their share price decline by around 63 percent as investors repriced the company downwards after it recorded a 60 percent decline in gross profit from N15.32 billion in 2018 Q2 to 6.15 billion in 2020 Q2.
Investors unimpressed by the consistent decline in gross profitability of the firm sold down on its shares, causing the company share price to drop from N36 as at end of Q2 2018 to N13 as at end of Q2 2020.
Meanwhile, the drop in gross profit can be attributed to the 43.20 percent drop in revenue Unilever recorded between Q2 2018 and Q2 2020. The company saw its revenue decline by 45 percent moving from N42.65 billion in Q2 2019 to N14 billion in Q2 2020, while in the three year period recorded a drop from N48.12 billion in Q2 2018 to N27.33 billion in Q2 2020.
The company also posted lower cost of sales of N32.80 billion in Q2 2018 and N31.31 billion in Q2 2019 compared to the N21.81 billion it posted in Q2 2020.
Read also: Unilever H1 ‘20 result waves warning flag for FMCGS
Analysts however, do not see an immediate change in fortunes for Unilever, as the impact of the COVID- 19 pandemic still lingers. Weaker consumer spending coupled with higher inflation and dollar scarcity is impacting negatively on sales performance and disrupting supply chains within the manufacturing industry.
Investors can only hope that the economic rebound expected next year brings about the much needed turnaround in the company’s financial performance.
The fast moving consumer goods firms (FMCGS) are walking on rotten ice as evidenced in a disappointing second results that sent a predawn chill down the spine of investors.
Hitherto the outbreak of the virus from China that took the world by surprise, companies had been reeling from inflationary pressures, decrepit infrastructure, and poor government regulations..
For instance, International Breweries has been recording recurring losses since last year, and huge debts and weak sales is a recipe for bankruptcy..
Of course, closure of bars and social events have compounded the brewer’s woes, and that’s on top of stiff competition it’s grappling with.
Analysts and investors have warned that a slow economic recovery could see the disappointing results spill into subsequent quarters.
Cadbury Nigeria, Nigeria Breweries, and Honeywell Nigeria fell of the cliff as net income slumped, raising concerns about their ability to make money from core business operations.
