Unilever Nigeria Plc has retained profit growth even amid rising cost of production brought on by a challenging operating environment as the consumer goods giant continues to pass along high prices to consumers.
For the first six months through June 2024, Unilever’s profit after tax (PAT) spiked by 60.50 percent to N4.43 billion from N2.76 billion the previous year.
The over 50 percent uptick in the company’s profit was because it did not incur loss on discontinued operations this year as it had disposed of the Home Care business category.
Sales were up 40.90 percent to N63.90 billion as at June 2024, driven by both volume and price hikes.
It is important to note that Unilever Nigeria struggled against inflation and cost pressures as total cost of production has risen, a significant challenge hurting consumer goods firms, as some of them incurred huge foreign exchange losses that tipped them into technical insolvency
For instance, cost of sales rose by 16.86 percent to N37.69 billion in the period under review from N32.25 billion the previous year.
Marketing and distribution expenses surged by 162.75 percent to N17 billion as at June 2024 from N6.47 billion as at June 2023.
A breakdown of marketing and distribution expenses shows the Brand Marketing segment surged by 180.98 percent to N7.93 billion as at June 2024 from N2.84 billion as at June 2023. Overheads were up 249.26 percent to N7.16 billion as at June 2024 from N2.05 billion as at June 2023.
“The 2024 overhead is driven by the impact of naira devaluation on foreign denominated obligations, investment in capability development and general inflation on goods and services,” said the company.
Nigeria’s inflation rate increased to 34.19 percent in June 2024, according to data released by the National Bureau of Statistics on Monday, July 15, 2024.
There are growing concerns that the incessant hiking of the interest rates by the central bank to rein in inflation and spur foreign investment deleterious to firms that have debt in their books. This is because higher borrowing costs balloon finance costs which undermines profit and depresses stock prices.
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