Unilever Nigeria Revenue grows 43% to ₦39.15 billion in 6 months

Unilever Nigeria - Earnings slide expected despite Revenue rebound Brandspurng

Unilever Nigeria Plc., one of the leading players in the Nigerian Consumer Goods sector, specialized in the manufacturing and marketing of Food Products (FP), and Home & Personal Care products (HPC), released its unaudited financial statements for Half Year of 2021 on Friday, 16th of June, 2021.

Unilever Nigeria’s revenue increased by 43% to ₦39.15 billion from ₦27.34 billion in the corresponding period 2020. The company was able to increase its revenue by transferring control over some of its products to a customer. Also, the company currently has 101 key distributors and each key distributor account for more than 10% of the company’s revenue.

Also, Unilever Nigeria experience a jump of 38% (from ₦21.18 billion in H1’2020 to ₦29.28 billion in H1’2021) in its Cost of Sales, and an increase also in its expense items such as; Selling and Distribution Expenses, soared by 34% (from ₦1.25 billion in H1’2020 to ₦1.68 billion in H1’2021), and Marketing & Administrative Expenses, surged by 36% (from ₦5.72 billion in H1’2020, to ₦7.80 billion in H1’2021), jointly driven by 87%, and 72% increase in Brand & Marketing, and Royalties & Service Fees respectively.

Unilever Nigeria - Earnings slide expected despite Revenue rebound Brandspurng

On the other hand, the Finance Cost increased as well by 780% to ₦45.47 million from ₦5.17 million in H1’2020, due to a decline in the interest rate on third party bank loans and increase in employee benefit charge, while the Finance income shrunk by 23% to ₦650.66 million from ₦849.35 in H1’2020, aided by 30% decline in net gain on remeasurement of foreign currency balances, and also 55% decline in Unwinding of the lease liability.

However, the Company’s Profit Before Tax (PBT) and Profit After Tax (PAT) soared by 209% and 197% to ₦619.55 million and ₦503.93 million, as against losses of ₦566.80 million and ₦519.11 million in the corresponding period of 2020.

Consequently, the Earnings Per Share (EPS), settled at ₦0.21 per share; representing a 175% increase as against a drop of ₦0.28 in H1’2021.

Going forward, we expect the company to extend its improved performance in 2021, which was impeded in 2020 due to COVID-19 and other anti-social activities in the country. Our position is based on favourable drivers such as increasing demand, and the company’s marketing strategy despite high inflation and FX.

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Therefore, our target price for Unilever is ₦17.10, with an upside potential of 23.7%, to the closing price of ₦13.05 as of Monday, 19th July 2021.

Hence, we recommend a BUY on the stock.