NSE TICKER: UNILEVER
It was another unimpressive outing for Unilever Nigeria Plc, as it reported a substantial decline in revenue for the second consecutive first quarters. In the first quarter report for the period ended 31st March 2019, the company had seen its revenue decline by NGN5.06bn, and for the first quarter ended 31st March 2020, the company saw further revenue decline by NGN5.90bn, representing a drop of 30.71% Year on Year. Although both the company’s product segments (Food Products and Home Care & Personal Care) saw decline in revenue, the Management Board will be more worried with their Home & Personal Care segment. The Home & Personal Care segment include sale of skin care and oral care products, fabric care and household cleaning, and this segment boast renowned brands in the market like Vaseline, Close-up, and Omo. This segment has seen its revenue eroded consecutively over the past 3 years; NGN 13.64bn in Q1 2018, NGN9.98bn in Q1 2019, NGN5.91bn in Q1 2020.
The company reported a Profit After Tax of NGN1.11bn, a drop of 26.7% Year on Year, with a Profit After Tax Margin of 8.3% (Q1 2019: 7.9%). Despite an aggressive reduction in Cost of Sales, which resulted in a Gross Profit of NGN3.42bn (Q1 2019: 3.86bn), the increase in Marketing and administrative expenses to NGN2.32bn (Q1 2019: NGN1.51bn) ensured a dismal operating profit of NGN453.44mn (Q1 2019: NGN1.31bn).
In 2019, Unilever Nigeria Plc made headlines across the nation over its high Accounts Receivables, the Q1 2020 report shows that this problem still persist as they have a total of NGN24.64bn Trade and other receivables (2019: 24.13bn). A closer look at the numbers by Investogist Analysts showed that a significant portion of these debts are owed by related parties; Unilever Cote D’Ivoire NGN3.46bn and Unilever Ghana NGN 4.06bn.
The company through its Corporate Affairs Director, Mrs Soromidayo George, said that “Unilever Nigeria remains focused on its strategy to deliver sustainable growth and will continue to monitor the business environment and remain dynamic in its response to challenges to operations and the economy, in the light of the Covid-19 pandemic”.
Unilever Nigeria Plc. is in corporated in Nigeria as a public limited liability company under the Companies and Allied Matters Act (CAPC20) Laws of the Federation of Nigeria, 2004 and is domiciled in Nigeria. The company’s shares are listed on the Nigerian Stock Exchange NSE). The company is principally involved in the manufacture and marketing of Foods and refreshments, Home care and Beauty and personal care products. It has manufacturing sites in Oregun ,Lagos State and Agbara, Ogun State.
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Unilever Nigeria Plc shares closed today at NGN11.00 on the Nigerian Stock Exchange, this is 72.54% down from 5 years ago, 67.65% down from a year ago, and 50% down Year to Date, despite these decline we do not think that the company is out of the woods yet. The stock is a NO BUY in our books, as we anticipate that the ongoing COVID-19 Pandemic will exacerbate an already bad financial performance for them.
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Written by:
Basil Maduakor
Analyst/Writer @Investogist
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