FRI, OCT 20 2023-theGBJournal|Unilever Nigeria Plc (UNILEVER) published its Q3-23 unaudited results today, reporting a standalone loss per share of N0.19 (vs loss per share of N0.39 in Q3-22), driven primarily by the robust revenue growth (+30.6% y/y) amid higher income tax expenses in Q3-23 (N1.48 billion vs tax credit of N251.02 million in Q3-22).
For 9M-23, the company reported earnings per share of N0.29 (vs loss per share of N0.06 in 9M-22).
Q3-23 revenue grew by 30.6% y/y (9M-23: +26.0% y/y), slightly underperforming our expectations (5bps variance), with the positive outturn driven majorly by the revenue growth in the Food Products (+40.3% y/y | 55.3% of revenue) segment.
Meanwhile, revenue from the HPC segment (+20.3% y/y | 44.7% of revenue) also increased.
We believe higher pricing drove the solid revenue performance in the quarter as our channel checks reveal that the company raised its prices across its product portfolio by c. 16.6%.
Additionally, UNILEVER’s export sales recorded substantial growth in the quarter (+81.0% y/y), highlighting the effects of the higher FX rate. However, on a quarter-on-quarter basis, revenue declined by 7.5% amid consumers; continuous downtrading.
Gross margin showed a remarkable improvement, as it surged by 884bps to 23.1% (Q3-22: 14.2%), owing to the faster growth in revenue (+30.6% y/y), which outpaced the increase in the cost of sales (+17.1% y/y).
The higher cost of sales was due to a 14.5x increase in revaluation loss related to foreign-denominated payables and 530.1% y/y increase in restructuring costs resulting from the halt in production in the home care category.
UNILEVER achieved positive EBIT and EBITDA margins of 1.6% and 3.8%, respectively, driven by the significant improvement in the gross margin despite a 4.1% y/y rise in operating expenses.
The company’s net finance cost printed N57.38 million in the quarter (vs net finance income of N101.51 million in Q3-22), owing to a 214.6% y/y increase in finance cost, accompanied by a 127.1% y/y growth in finance income.
The higher finance costs were due to a substantial 543.6% increase in loan interest during the period.
Overall, profit before tax printed N389.30 million in Q3-23 (vs pre-tax loss of N2.51 billion in Q3-22). Following a tax expense of N1.48 billion (vs N251.02 million tax credit in Q3-22), the company recorded a loss after tax of N1.09 billion (vs loss after tax of N2.25 billion in Q3-22).
”We like that UNILEVER could keep its costs in check, evidenced by the substantial improvement in gross and operating margins despite the challenging inflationary conditions in the operating environment, Cordors Research said in a note to theGNJournal.
”However, we acknowledge that higher income tax expenses impacted the company’s profitability during the period. For Q4-23, we expect strong revenue growth due to increased demand driven by festive-induced consumption.”
Overall, we expect the company to end the year positively, given the company’s low leverage and huge cash balance, which offers a cushion to its earnings
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