Unilever posts N2.25bn loss as sluggish sales growth drives weak earnings

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BY BAMIDELE FAMOOFO

Uba Group

Multinational consumer goods Company, Unilever Nigeria Plc, recorded a loss after tax of N2.25billion in third quarter of 2022.

The Company made a profit after tax of N367.98 million in the same of 2021.

Sluggish growth in sales in the review financial period ended September 30, 2022 has been explained as the reason why the Company recorded a loss.

The Company’s Q3-22 financial figures, made available by the Nigerian Exchange Limited, showed that revenue grew by 7.1 percent year- on- year as against 10.3 percent recorded in the same period in 2021. A drop of 33.5 percent recorded in Food Products revenue in the period as against a growth 51.5 percent printed in Q3, 2021 was a major reason why profit dropped, according to Analysts at Cordros Securities.

Lower volumes drove the sub-par revenue performance in the quarter as our channel checks reveal that the company raised its prices across its product portfolio by about 15 percent. Sequentially, revenue declined by 9.8 percent y/y on a q/q basis, following the decline in HPC sales (-20.6% q/q) during the quarter – Food Products sales grew by 3.4 percent q/q.

Overall, loss before tax printed N2.51 billion in Q3-22 as against profit before tax of N385.77 million in Q3-21). Following a tax credit of N251.02 billion (vs N17.79 million tax expense in Q3-21), the company recorded a loss after tax of NGN2.25 billion (vs profit after tax of N367.98 million in Q3-21).

Gross margin bucked the trend from the previous quarters in the year, as it fell by 16.39ppts to 14.2 percent (Q3-21: 30.6%), owing to the faster growth in the cost of sales (+32.4% y/y), which outpaced the increase in the top-line (+7.1% y/y).

Consequently, EBITDA (-22.2% y/y) and EBIT (-19.5% y/y) declined following the fall in gross profit (-50.2% y/y) amid a 1.6 percent y/y reduction in operating expenses.

UNILEVER’s net finance cost declined by 23.7 percent y/y in the quarter, owing to a 391.5 percent y/y increase in finance income; finance cost for the period was N328.89 million (Q3-21: Nil).