Published On: Mon, Apr 23rd, 2018

Unilever hits bull’s eye

…shareholders smile to the bank




Despite the Nigerian Stock Exchange activities tumbling into a difficult patch as the All Shares Index (ASI) dipped from a 16 per cent year-to-date (YTD) yield in February to a more recent 6.6 per cent yield, investors in Unilever, one of Nigeria’s most venerable corporate consumer goods brands, should have a lot to smile about as the company declares a dividend payment of 50 kobo per share which is 90 per cent higher than the 10 kobo per share dividend declared in the contemporary period of 2016.


The detergent and toothpaste maker posted a N7.5b Profit in 2017 as the company released its 2017 financial figures. The company’s profit for the year showed a significant 143 percent increase, closing the year at N7.5 billion as against N3.1 billion in 2016.

Its profit before tax also increased 173 percent, closing at N11.2 billion in the period compared to N4.1 billion in 2016.

A critical assessment of the company’s financial statements reveals that revenue appreciated by 30 percent to N90.8 billion in 2017 from N69.8 billion in 2016.

Its gross profit stood at N28.9 billion in 2017 to N20.3 billion in 2016. Its operating profit ended at N12.9 billion in the period under review compared to N5.8 billion in 2016.

At the end of the business year, Unilever’s total assets in 2017 stood at N121.1 billion against N72.5 billion in the corresponding period of 2016.

In addition the total liabilities dropped to N45.2 billion last year from N60.8 billion two years ago mainly because of huge amount paid to clear some loans obtained by the firm.

While the shareholders’ fund increased by 549 percent to N75.9 billion in 2017 from N11.7 billion in 2016, its Earnings per Share (EPS) of Unilever Nigeria stood at N1.78k in 2017 compared with 81k in 2016. Unilever Nigeria Plc has recommended the payment of 50 kobo gross per share as dividend for the year ended December 31, 2017.

”Again, gross margin was above 30% for the third consecutive quarter. This can be attributed to the CBN’s intervention in the fx market through the NAFEX window. Unilever successfully raised N63bn via a rights issue last year. Management indicated that the proceeds will be used to settle foreign currency intercompany loans, support working capital and for capacity expansion. We attribute the positive net finance income recorded during the quarter to this influx of cash,”Analysts at Proshare said.

Since its half year results when it reported an increase of 239 per cent, Unilever has maintained a high performance pedestal. ”Although Unilever Nigeria has not been insulated from the tough economic environment, we have remained focused on our short and long term growth ambitions with strong emphasis on operational intensity, cost efficiencies, growing market share across key categories as well as reinvesting behind our iconic brands,”

“We are more resolute than ever to continue to forge ahead despite the business operating environment. As a company, we will continue to appreciate the resilience and unwavering commitment of all our stakeholders; shareholders, dynamic employees, loyal consumers, dedicated suppliers and other business partners for their unflinching support through these challenging times,” said Chairman of Unilever, Nnaemeka Achebe, the Obi of Onitsha.

The company has built on the half year results in which revenues for the period ended June 2017 increased by 39.7 per cent from N32.277billion in 2016 to N45.105billion in 2017.

Profit Before Tax doubled 239 per cent from N1.487billion in 2016 to N5.044billion in the corresponding period of 2017.

The company in fact, also doubled its profit after tax which grew 236 per cent from N1.093 billion in 2016 to N3.676billion in 2017.

The company also achieved strong performance for the year ended December 31, 2016. A cursory examination of its results reveals a significant jump in profit after tax by 157 per cent from N1.19billion in 2015 to N3.07billion in 2016. Unilever Nigeria’s turnover increased 17 per cent in 2015 from N59billion to N69 billion in 2016, showing a sustained growth.

Despite the weak economy, the company’s cost of sales increased by 29.6% from N38bn for the period ended December 31, 2015 to N49bn for the year ended December 31, 2016. This reflected rising cost given the currency volatility which pushed up prices of raw materials.

While the high cost of sales was caused by an exchange revaluation loss of N1.7bn in 2016, cost of operations dropped by 16% from N13.1bn for year ended December 31, 2015 to N11.6bn for the year ended December 31, 2016. However, other income grew by 60% to N124m from N77.5m in 2016.

Macroeconomic environment

2017 was a mixed businesses year in Nigeria even though the country has crawled out of recession . The economy slipped into the negative of -0.34 percent and fell into full recession in the second quarter by -2.06 and further by -2.24 in third quarter and ended the year in -1.5 per cent negative. In fact, the economy is now positive at 1.9 per cent growth.

Manufacturers and other sectors of the economy are now beginning to breath gradually but there are still macroeconomic hiccups.

File photo courtesy of

President, Manufacturers Association of Nigeria (MAN), Frank Jacob had noted that industrial capacity utilisation hovered around 20 per cent in 2016.

“More than half of the surviving firms are classified as ailing which posed serious threat to the survival of the manufacturing sector.

“The business environment was plagued by epileptic power supply, bad roads, high interest rate and high cost of energy which contributed to high cost of production and impediment to competitiveness of the sector,” he said.

Others fingered the in ability of manufacturers to import raw materials for production.

The apex bank had earlier maintained an official exchange rate with the bound of N197 to N199/USD from February 2015 to June 2016 and later introduced a new foreign exchange system and some monetary controls in June 2016. Though easing the exchange rate is still very high at 360/$1.

The Apex had also banned 41 raw materials from getting foreign exchange for importation at the official segment of the foreign exchange market.

Director-General, Nigerian Textile Manufacturers Association (NTMA),Hamma Kwajaffa explained that the textile industry nearly went into extinction due to inability to access foreign exchange for critical raw materials.

File photo courtesy of

Though the CBN has eased the challenge of scarcity of foreign exchange, lack of infrastructure , high banking charges and lack of raw materials as some manufacturing firms are still struggling with reduced production capacity, staff strength and remuneration of workers.

Despite these challenges Unilever Nigeria Plc which manufactures and markets consumer products primarily in the home, personal care and foods categories has survived.

The Company sells products such as Omo washing powder, Key soap, Royco bouillon, Lipton tea, Blue Band margarine; Pears baby care goods, Vaseline petroleum jelly, Lux soap, and Close Up toothpaste. Market observers believe that Unilever’s products are household names which have penetrated the market over the years and are capable of sustaining the company’s growth.

The company has assured stakeholders that, “Although Unilever Nigeria has not been insulated from the tough economic environment, we have remained focused on our short and long term growth ambitions with clear emphasis on operational intensity, cost efficiencies and growing market share across key categories”, but experts do not have any doubt that the company has been relatively consistent it its performance in recent times.

Managing Director, Crane Securities limited, Mr. Mike Ezeh reckons the company achieved a strong performance.

‘’The company’s product is every home and shareholders are still confident given its fundamentals’’, Ezeh said.

‘’The company is an investment grade and it is one of the biggest and most profitable firms on the exchange,” Managing Director, HighCap Securities limited, Mr. David Adonri said.


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