WED JULY 22 2026-theGBJournal| Unilever Nigeria Plc delivered another quarter of double-digit revenue growth in the three months to June 2026, but rising operating expenses (OPEX) and a sharp increase in its effective tax rate eroded the gains, leading to a modest decline in quarterly earnings despite stronger operating profitability.
The consumer goods maker reported unaudited second-quarter earnings per share (EPS) of ₦1.49, down 3.1 per cent from a year earlier, bringing first-half EPS to ₦2.72, an 8.3 per cent year-on-year increase.
The weaker quarterly earnings came despite an 18.8 per cent rise in revenue, as higher operating expenses and a significantly larger tax bill offset the benefits of stronger sales and improved margins.
Revenue growth continued to be driven by the company’s Food Products division, where sales rose 26.3 per cent year-on-year, increasing its contribution to group revenue to 64.8 per cent from 61.0 per cent a year earlier.
Beauty & Wellbeing revenue climbed 13.6 per cent, while Personal Care expanded a modest 4.7 per cent, reflecting persistent pressure on discretionary consumer spending.
On a quarter-on-quarter basis, revenue increased 2.7 per cent, supported by stronger demand for Food Products and Beauty & Wellbeing, which outweighed weaker Personal Care sales.
The company benefited from improved pricing and a gradual recovery in volumes, allowing revenue growth to outpace the increase in production costs.
Gross margin expanded 79 basis points to 46.3 per cent, while EBIT and EBITDA margins improved to 21.2 per cent and 22.5 per cent, respectively.
Although operating expenses increased 18.9 per cent year-on-year, the pace of growth broadly matched revenue expansion and was significantly lower than the 31.9 per cent increase recorded in the corresponding quarter of 2025.
Lower overheads and reduced royalty and service fee expenses partly offset a sharp 76.5 per cent increase in brand and marketing expenditure, helping preserve operating profitability.
As a result, profit before tax rose 17.6 per cent year-on-year, supported by stronger operating performance and a marginal improvement in net finance income as finance costs declined.
However, the gains were largely absorbed below the operating line.
The company’s effective tax rate climbed by 11.61 percentage points to 45.5 per cent, resulting in a 57.8 per cent surge in tax expense that more than offset growth in pre-tax earnings.
Consequently, profit after tax and EPS declined 3.1 per cent year-on-year in the second quarter.
Despite the softer earnings performance, the board declared an interim dividend of ₦2.00 per share, equivalent to a dividend yield of about 1.6 per cent, signalling confidence in the company’s cash generation and financial position.
The results underscore the resilience of Unilever Nigeria’s core business, with pricing power and improving consumer demand supporting revenue and operating margins.
However, they also highlight how rising operating costs and a substantially higher effective tax burden can dilute the benefits of stronger sales growth, ultimately weighing on shareholder earnings.
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