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

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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.

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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.

Read Also:  Unilever Launches ‘Everyday Essentials’ Store on Jumia

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.

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