Rising costs take huge bite on Unilever Nigeria’s Q1 earnings resulting to 144% profit decline

NIGERIA – Unilever Nigeria, one of the leading players in the Nigeria’s consumer goods sector, has recorded a turnover of N19.4 bn in the first quarter of 2021, representing a 46% growth compared to N13.3bn recorded in the corresponding period of 2020.

According to reports by Brand Spur, the rise is attributed to a 48% growth in sales.

However, the gains were wiped out by a 51% upsurge in cost of sales, jointly driven by an increase in brand and marketing, overheads, and service fees which shot up by 63%, 53% and 124% respectively.

Also, the finance Income shrunk by 62% to N186.79m from N495.64m in Q1’2020. This was aided by a 90% decline in Interest on-call deposits and bank accounts and, also a 42% decline in Exchange difference on bank accounts.

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However, the company’s finance cost increased by 5498% to N3.37m from N614,000 in Q1’2020. This major upsurge was attributed to Interest on third party bank loans and employee benefit charge.

As a result of the high cost of sales and finance cost, the company’s Profit Before Tax (PBT) declined by 112% to N110.09m, as against N948.47m earned in the corresponding period of 2020.

Unilever reports a 5.7% growth in sales globally in Q1’2021

Overall, Unilever recorded loss after tax of N492m for the quarter ended 31st March 2021 compared to profit after tax of N1.1 billion in 2020, representing a decline of 144%.

Speaking on the results, the Corporate Affairs and Sustainable Business Director, Soromidayo George said that the improved performance shows the determination and commitment of Unilever to continue to implement strategies that would enable it deliver value to its customers and shareholders.

“Unilever Nigeria remains focused on its strategy to deliver sustainable growth both in the medium and long-term.” Said Mrs. George.

Amidst the prevailing operational challenges of the environment, Unilever Nigeria will continue to focus on its vision of making sustainable living commonplace by serving Nigerian consumers with the right products that improve their health and wellbeing.

Meanwhile, in the global font, the maker of Magnum ice cream, reported a 5.7% growth in sales in the same period under-review, as strong performance in emerging markets offset declines in Europe, where volumes were impacted by lockdowns.

Emerging markets grew 9.4% driven by strong double-digit growth in China and India, following strict lock-downs in the prior year.

Latin America grew high-single digit while South East Asia declined, driven by Indonesia. Developed markets, on the other hand, grew 0.8%, with mid-single digit growth in North America offset by a decline in Europe.

The company further noted that acquisitions which included functional nutrition brands Horlicks, Liquid I.V. and SmartyPants Vitamins, had a positive impact of 1.9% on the company’s bottom line although there was a negative impact of 8.0% from currency related items.

The company’s Food and Refreshment segment reported underlying sales growth of 9.8% with 7.3% achieved from volume and 2.3% from pricing.

The owner of Lipton Tea noted that operational separation of Unilever’s Tea business is progressing well and is expected to be complete this year.

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