Another rosy year for Unilever Nigeria

Unilever Nigeria has improved further the high earnings speed with which it began the 2017 financial year. The conglomerate closed the third quarter trading last September with a far bigger profit than it posted in all of 2016.

Sales revenue has gained speed from a growth of 32% in the first quarter to 39% in the third. Profit multiplied more than three times year-on-year to stand at N4.83 billion at the end of September 2017.

The company closed the 2016 operations with a big rebound in profit that lifted after tax profit by 158%. Another triple digit growth in profit looks quite likely for Unilever at the end of 2017.

The company has broken free from a three-year falling trend in profit and is showing good prospects for attaining a new profit high at the end of 2017. Unilever’s good earnings story improved even further at the end of the third quarter.

Accelerating growth in revenue remains the driving force of the company’s impressive earnings performance since last year. Sales revenue amounted to N69.13 billion at the end of the third quarter, a year-on-year growth of 38.6%.

Full year revenue projection is revised further up from N92 billion to N93 billion for Unilever at the end of 2017. That will be an increase of 33% over the turnover figure of N69.78 billion the company posted at the end of 2016.

The company’s cost-income relationship has improved further, which enhanced profit capacity and stretched out profit margin at the end of the third quarter. After tax profit amounted to N4.83 billion at the end of September – a year-on-year growth of 208%. That is already well above the 2016 full profit figure of N3.07 billion. The full year after tax profit projection of N6.8 billion is retained for Unilever for 2017, indicating a full year profit leap of 121%.

Triple digit growth in profit for the second straight year is expected to establish a new profit peak for Unilever in 2017. This means for the first time in five years, the company is expected to beat the peak profit figure of N5.6 billion it posted in 2012. Unilever lost profit in each of the three years that followed until the rebound in 2016.

The company’s strong profit performance so far in 2017 reflects both the accelerating sales revenue and some cost moderation. At about N47.70 billion, cost of sales slowed down in the third quarter, which enabled a strong growth of 46% in gross profit year-on-year at the end of September.

Selling/distribution expenses grew ahead of revenue at 39% but marketing and administrative expenses declined slightly at the end of September 2017, providing a major cost saving channel for the company. The cost savings paved the way for a near tripling of operating profit to N9.17 billion at the end of the third quarter.

Finance costs grew sharply at 71% to N2.98 billion but this was slightly moderated by an increase of 336% in finance income. Net profit margin improved from 3.2% in the same period in 2016 to 7% over the review period – a continuing improvement from 2% in 2015 to 4.4% at the end of 2016.

The company earned N1.28 per share at the end of the third quarter compared to 41 kobo in the same period last year. It is expected to earn N1.80 per share at full year. Unilever ended 2016 operations with earnings per share of 81 kobo and paid a cash dividend of 10 kobo per share.