Unilever Nigeria reports 52.6% decline in profit driven by drop in revenue

NIGERIA – Consumer goods firm, Unilever Nigeria has reported a 30% drop in the top line revenues in the first quarter of 2020 (January to March) reflecting a tough start to the year for the company.

Revenue from its Food Products division fell 19.5% from N9.2 billion (US$25.5m) in the corresponding quarter in 2018 to N7.4 billion (US$20.5m) this quarter.

Profits also went from N2 billion (US$5.5m) to N948 million (US$2.6m) a 52.6% decline year on year.

Its food division include brands such as Lipton Yellow Label Tea, Knorr and Royco bouillon cubes among others.

The slump in performance comes on the back of the border closure by the Nigerian government last year.

President Muhammadu Buhari in August shut the country’s land borders with both Benin and Niger in a bid to end rampant smuggling activities across the frontiers, which he blamed on the supposed failure of both trade partners to guard their borders properly.

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Several businesses across Nigeria and its neighbouring countries have since been affected by the move that has resulted in price increases in basic food items such as rice and frozen foods as well as general consumer goods.

Compounding the rise in inflation and narrowed purchasing power of Nigerians was the 4-week lockdown imposed on Lagos, Ogun, and Abuja in the wake of the coronavirus outbreak, which has further dented consumer confidence and demand for non-essential household products.

Being one of the first major earnings reports for the current financial year published on the Nigerian Stock Exchange, analysts expect a similar pattern in the results of other Nigeria-based businesses as they post their results on the exchange.

Though the full effect of the pandemic-induced lockdown will be felt in Q2 2020, the stall in economic activity February and March will likely have an effect on company results.

Globally the Anglo-Dutch consumer giant saw a slight rise in first quarter sales of 0.2% as the coronavirus has caused hygiene product sales to rocket while those of food products and ice cream melting.

“The COVID-19 disease is having an unprecedented impact on people and economies worldwide,” chief executive Alan Jope noted in a statement

“Demand patterns are changing. As the crisis hits countries around the world, we see upswings in sales of hygiene and in-home food products, combined with some household stocking, and near cessation of out of home consumption which is particularly affecting our food service and ice cream business,” he added.

During the quarter Unilever introduced a wide-ranging set of measures to support global and national efforts to tackle the Covid-19 pandemic.

They contributed €100 million through donations of soap, sanitizer, bleach and food as well as leveraging on its procurement network to acquire much-needed medical equipment for organisations around the world.

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