Unilever Nigeria’s Q2 profit grows by 26%

Unilever Nigeria, a listed consumer goods company, turned the corner in the second quarter of 2019 after a somewhat lacklustre first quarter.

The company reported a growth of 21.8% in its turnover from N19.2 billion in Q1 2019 to N23.4 billion in Q2 2019, althoughtheresultshowsadecline of 11% in its half year turnover fromn48.1billioninjune2018to N42.6 billion in June 2019.

The Company reported an increase of 26 percent in profit after tax from a profit of N1.5 billion in Q1 2019 to a profit of N1.9 billion in Q2 2019. However, compared to last year, the company’s first half profit was down 37.5% to N3.5 billion in June 2019 from N5.6 billion in June 2018.

Cost of sales decreased by 4.5% from N32.8 billion in June 2018 to N31.3 billion in June 2019 in line with the decrease in turnover while cost of sales increased by 3.6% to N15.9 billion in Q2 2019 from N15.4 billion in Q1 2019 also in line with the marginal increase in Q2 turnover.

In a statement released by the company, Unilever Nigeria

assured shareholders of its efforts to ensure a sustained and steady growth in the company’s operations engineered to achieve better returns on their investments.

“Although Unilever Nigeria continues to operate in a tough environment, we are now beginning to see momentum behind enhanced costs and operational efficiencies. Unilever Nigeria remains focused on its short- and long-term growth ambitions with clear emphasis on cost and operational efficiencies, increasing market share across key categories, reinvesting behind our iconic brands and improved route-to-market.” Said, the Managing Director, Unilever Nigeria, Yaw Nsarkoh.

Comparing Unilever’s H1 2019 to H1 2018, there was a decline in revenue across key product segments as both Food business and Home & Personal Care (HPC) business slumped 3.1percent year-on-year and 18.4percentyear-on-yearrespectively to N21.4bn and N21.3bn in H1 2019 from N22.0bn and N26.1bn in H1 2018.

Notably, the previously vibrant HPC segment in Unilever’s revenue mix is now at par with the Food business due to sustained weakness.

On a positive note, food revenue recovered during the quarter climbing 6.3percent quarter-on-quarter to N12.1bn. Unilever’s HPC business remains pressured as the business segment recorded a 9.0percent quarter-on-quarter decline to N11.3 billion.

While Unilever’s Knorr and Royco seasoning cubes continue to sustain the Food business, the Home and Personal Care (HPC) business remains pressured from the presence of several competing choices on retail shelves across the country.

Trade receivables ballooned 67.2percnt to N50.5bn in H1 2019 from N30.2bn at the end of 2018, the jump was driven by N5.8bn and N6.5bn increase in Gross Trade Receivables as well as Advances. The steep rise in Trade receivables has seen Days of Sales Outstanding ratio expand to 163 days as at H1 2019 from 114 days as at FY 2018, an attempt to drive sales by extending better credit repayment conditions to distributors given weaker sales and tighter margins.

Shares of Unilever traded at N32.00 on the floor of the Nigerian Stock Exchange on Friday with its one year return down 36.8percent.