Unilever Nigeria’s profits triple in 9 months

NIGERIA – Unilever Nigeria Plc has recorded an impressive performance for the nine months ended September 30, 2017, showing a jump of 206 per cent.

The results showed revenue of N69.1 billion in 2017 (US$192 million), up 38 per cent from N49.8 billion (US$138 million) in the corresponding period of 2016.

Sales and distribution expenses rose from N2.2 billion to N3.1 billion, while marketing and administrative expenses fell from N9.371 billion to N9.1 billion.

Finance costs increased by 70.2 per cent from N1.75 billion to N2.98 billion in 2017, while net profit soared by 206 per cent from N1.6 billion to N4.8 billion in 2017.

Market operators said the performance is impressive and would be improved upon going forward once the finance costs further reduce after the receipt of the proceeds of the last Rights Issue of N58 billion.

Looking at the third quarter results, analysts at Cordros Capital Limited said revenue and net profit grew by 36.6 per cent and 142.7 per cent respectively.

“Compared to our estimate, the reported revenue was ahead by two per cent while PAT lagged by 37 per cent on significantly higher-than-expected (278 per cent variance) finance charges,” they said.

The explained that finance costs increased by 48 per cent and 25 per cent q/q, on the repayment of short term USD intercompany loans.

“As at end September, gross debt stood at N7.96 billion, the lowest since Q1-14, suggesting – and validated by the N30.7 billion outflow reported under financing cash flow – that management has commenced the process of significantly deleveraging the balance sheet following the recently concluded rights issue.

The higher-than-expected finance cost signal possible changes (presumably exchange rate) to the terms of the intercompany borrowings,” the analysts said.

The Managing Director of Unilever, Mr. Yaw Nsarkoh has said that through this rights issue, the company will be able to reinforce its financial flexibility to support its growth initiative..

“The rights issue is part of Unilever Nigeria’s long term strategic intent to strengthen the company’s capital base by deleveraging its balance sheet, support its working capital needs and position the company to exploit value accretive opportunities,” Nsarkoh said.

He explained that the net proceeds would help the company repay outstanding foreign currency denominated liabilities, purchase additional raw materials required for Unilever’s products and to meet other working capital requirements in order to build long term value for all stakeholders.

He noted that even in this period of economic downturn, Unilever Nigeria was dogged about ensuring sustained and steady growth in the company’s operations to achieve improved returns on investments.

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