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Unilever Nigeria Plc contributed more to Group’s earnings and free cash flow than Ghana and Cote d’ Ivoire, which underscores the resilience of the consumer goods giant that is thriving amid macroeconomic headwinds, according to a recent report by Chapel Hill Denham Limited.
In the past five years, the Nigerian manufacturer has been churning out more earnings than its African peer rivals, signaling that it is the pillar that holds Group Company in Africa.
A rigorous analysis by the investment house shows Unilever Nigeria boasting a revenue of $163.23 million, outpacing Ghana, $78.02 million, and Cote d’ Ivoire, $58.09 million.
The company’s EBITDA of $41.95 million is significantly ahead of Ghana’s $0.10 million and Cote d’ Ivoire’s $11.62 million.
It is worth noting that Unilever’s superior financial performance over its peer rivals stemmed from the execution of strategic decisions which helped it overcome the country’s macroeconomic challenges.
Discontinuation of its Home Care segment to focus more on more profitable segment helped saved costs and bolstered profitability.
Last year, it was a star performer in the consumer goods space as it recorded an uptick in earnings while the majority of its competitors posted huge loss after tax on the back of huge foreign exchange revaluation loss.
The company has kicked the ground rolling this year with an impressive performance as its revenue grew by 57.80 percent to N32.32 billion as at March 2023.
Despite inflationary pressure that led to rising cost of production, Unilever’s gross profit increased by 38.80 percent to N13.50 billion as at March 2023.
The consumer goods giant saw net profit or profit after tax (PAT) spike by 25.70 percent to N3.36 billion, thanks to lower tax burden, cost savings from discontinued operations, and foreign change gains.
“In our view, Unilever’s growth momentum in Q1-24 is consistent with the company’s track record of strong financial results over the past decade,” said analysts at Chapel Hill Denham Limited.
“Particularly noteworthy is the company crossing the N100 billion revenue threshold in 2023, and we attribute this to strategic business optimization,’’ said analysts at Chapel Hill Denham.
Analysts at Chapel Hill Denham say their recommendation of the company’s stock remains a Buy, as their 12-months target price presents a total return (including a dividend yield of 5.20 percent) of 97 percent from the closing price of N15.10 on 24 April 2024.
The aforementioned benign ratings are based on optimism bordering on the stability of the Naira, enhanced operational efficiency on the back ongoing factory modernisation, and expected increase in minimum wage which are expected to increase the demand for Unilever products.
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