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Tuesday, June 18, 2024

Unilever Nigeria returns to profit on increased credit sales

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Unilever Nigeria Plc returned to the path of profitability, thanks to an increase in credit sales to distributors even as the consumer goods giant was unable to implement price increases due to heightened competition.

The good tidings are that analysts see the company on a growth trajectory throughout the year if it maintains an excellent working capital circle and implements cost control measures.

For the first six months through June 2021, Unilever posted a profit after tax of N1.20 billion from a loss of N1.63 billion the previous year.

Revenue was up 40.85 percent to N19.72 billion in June 2021 from N14 billion the previous year.

There was strong growth across the HPC (+48.7% y/y) and Food (+34.6% y/y) segments, according to data gleaned from the financial statement.

But input cost soared due to inflationary pressures and currency devaluation. Cost of sales increased by 27.06 percent to N14.32 billion as at June 2021 from N11.27 billion the previous year.

The 27.06 percent increment in cost of sales is higher than the 17.75 percent inflation figure for the month of June.

Unilever and peer rivals were the hardest from the coronavirus pandemic that tipped the country into its second recession in five years in 2020.

Before the advert of the virus that disrupted the demand and the supply side of the market, companies had been struggling from receding consumer purchasing power, decrepit infrastructure, and poor regulations.

An incessant devaluation of the currency by the central to protect the external reserve balloons raw material cost, as most firms source raw materials and equipment from foreign countries.

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