ABUJA, July 25 – Unilever Nigeria Plc, one of the oldest manufacturers in the country, reported a nearly 12-fold increase in earnings for the second quarter of 2024 after exiting its homecare business.
Thank you for reading this post, don't forget to subscribe!According to the company’s latest financial statement, after-tax profit soared by 1,081 percent to N1.08 billion in Q2, compared to N91.5 million in the same period of 2023. For the first half of the year, profit rose to N4.44 billion from N2.76 billion the previous 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.
Unilever stated that the homecare business has been classified as discontinued operations in accordance with IFRS 5, noting that the segment represents a separate major line of business despite not meeting the criteria for a disposal group or being held for sale.
Further analysis shows that the company’s revenue grew to N31.6 billion in Q2 from N24.8 billion in the same period of 2023. The cost of sales decreased to N18.9 billion from N21.5 billion during the same period.
“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,” said Tim Kleinebenne, managing director of Unilever Nigeria.
“Our H1 unaudited results with 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,” he added.
Unilever Nigeria credited its strong revenue performance to price increases in response to high input costs and improved volume performance. According to analysts at Cordros Research, the company raised prices across its product portfolio by approximately 9.7 percent. Despite this, revenue declined by 2.2 percent quarter-on-quarter due to decreased sales in the beauty and wellbeing (-13.5 percent) and personal care (-9.9 percent) segments, while the food products segment saw a 4.2 percent increase.
“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,” the analysts noted.
For the first half of the year, Unilever’s revenue grew to N63.9 billion from N45.4 billion last year. The personal care segment contributed N22.2 billion to total revenue, while food products and beauty and wellbeing segments recorded N37.1 billion and N4.58 billion, respectively.
Selling and distribution expenses surged to N2.7 billion from N1.79 billion, and 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. Ngozi Edozien was named 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 operated in Nigeria for 100 years, selling brands such as Knorr, Royco, Vaseline, Pepsodent, and Closeup.
