Unilever Nigeria Profit To Fall As Company Discontinues In The Sale Of Tea Business

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Unilever Group, a UK investor, has acquired Unilever Nigeria’s tea business through another subsidiary, Unilever Tea MSO Nigeria Limited, a move that will have an impact on the Nigerian listed entity’s earnings.

Unilever Nigeria did sell the tea business for N5.4 billion in October 2021 to reduce its exposure in the tea market, where it earned N2.72 billion in profit from January to October last year.

Although Unilever Tea MSO now owns the entire tea business, Unilever Nigeria has been contracted to assist in the manufacture and sale of tea products for a fee based on a Transitional Service Agreement.

However, “all proceeds from the sale are remitted to Unilever Tea MSO Nigeria Limited and all costs incurred are charged back to Unilever Tea MSO Nigeria Limited,” according to a statement in the company’s Annual Financials Statement for the fiscal year 2021, which was released on Monday.

The cessation of the tea business will reduce Unilever Nigeria’s turnover, as the tea segment contributed N9.04 billion to the firm’s earnings in the first nine months of 2021 – with the sale, Unilever Nigeria will no longer earn from the tea market.

Meanwhile, Unilever Nigeria reported that its revenue for the fiscal year 2021 was N70.52 billion, up from N52.21 billion in the previous year.

Unilever Nigeria exited 2020 with a loss of N3.96 billion and a profit of N1.12 billion, indicating a return to profitability.