WED. 25 JANUARY, 2023-theGBJournal| Unilever Nigeria Plc (UNILEVER) published its Q4-22 unaudited results Tuesday, reporting a standalone EPS of N1.10 (vs EPS of N0.68 in Q4-21), bringing 2022FY EPS to N1.04 (2021FY EPS: N0.59).
The growth in earnings was due to the expansion in gross margin (+105.5% y/y) following a 30.5% y/y decline in cost of sales.
”The performance came in as expected, given the year-end festivities. However, we did not envisage the sizeable decline in the cost of sales witnessed in the quarter, which significantly improved the company’s margins and profitability,” said Cordros Research in note to theG&BJournal.
Q4-22 revenue grew by 14.9% y/y (2022FY: +25.8% y/y), driven by increased sales across the Food Products (+24.8% y/y | 50.0% of revenue) and HPC (+6.4% y/y | 50.0% of revenue) segments. We believe the festive-induced increase in consumption drove demand and supported the expansion in revenue amid a moderate price increase across UNILEVER’s product portfolio.
Sequentially, revenue increased by 14.3% on a q/q basis, following increases from the Food Products (+10.9% q/q) and HPC (+17.8% q/q) business lines.
Gross margin for the quarter reached its highest point in at least seven years, as it expanded by 26.32ppts to 59.7% (Q4-21: 33.4%), reflective of the decline in cost of sales (-30.5% y/y). Consequently, EBITDA (+17.49ppts) and EBIT (+22.42ppts) margins recorded expansions amid a 39.1% y/y increase in operating expenses.
UNILEVER reported a net finance income of N1.36 billion for Q4-22, owing to a higher finance income (Q4-22: N947.57 million | Q4-21: Nil) print for the period. The significant finance income in the period reflects the increase in interest on call deposits and bank accounts.
Overall, PBT grew by 360.2% y/y to NGN9.39 billion in Q4-22 (Q4-21: NGN2.04 billion). Following a tax charge of NGN3.05 billion, the company recorded a PAT of NGN6.34 billion (Q4-21: NGN1.55 billion).
UNILEVER’s ability to eke out growth in the HPC segment, amid the increased competition in the space, following the influx of cheaper unlisted brands impressed analysts at Cordros.
Cordros expects 2023FY sub-inflationary price increases to support UNILEVER’s topline, with most of the growth coming from the company’s Food Products segment.
”However, we believe the stiff competition in the HPC segment and cost pressures will inhibit UNILEVER’s profitability during the year. Our estimates are under review,” Cordros said.
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