Unilever Nigeria reports 17% fall in second-quarter profit

Consumer goods maker Unilever Nigeria has reported a 17% decline in second quarter profit as it faced increased costs.

– Top numbers

While Unilever’s revenue in April, May and June grew to N29.6 billion compared to N23.2 billion in the same quarter in 2022, its cost of sales rose by almost two-thirds, narrowing its profit margin.

The firm’s cost of sale, which covers total expenses incurred in producing or acquiring goods, rose 66.7% to N27 billion, the company said in its unaudited financial statement for the half year that ended June.

Unilever faced other major costs, including “impairment loss on trade and intercompany receivables”, which took N1.4 billion during the quarter, up from N7 million a year ago.

– Better half-year

The company, however, recorded a sizeable growth in profit for the first half of year, with its impressive first quarter performance covering up for the poor outing in second quarter.

Six-month profit climbed 44.8% to N2.8 billion and profit before tax was N4.5 billion. Its total assets increased from N125.4 billion to N148.7 billion.

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– Struggling through

Unilever in March said it would end the production of its iconic homecare products, Omo, Lux and Sunlight to focus on “business continuity measures that reduce exposure to devaluation (of the naira) and currency liquidity in our business model.”

The company said following the central bank’s easing of controls on the naira last month in a bid to unify the exchange rate, it now has trade financing arrangements with local banks that will pay foreign vendors while the company reimburses the banks later.

“The principal purpose of the arrangement is to facilitate efficient payment processing in view of the challenges being experienced with sourcing foreign currency in the Nigerian market,” it said.

“The arrangement enables the Company settle its foreign obligations in a timely manner to facilitate receipt of key input materials required in the production of finished goods.”

Unilever has struggled in the last few years with difficult economic and competition that has limited sales.

In 2017, the company sold off its spread business that had Blue Band, Becel, Flora, Country Crock, and ProActiv. In 2021, the firm sold its tea business (including Lipton).