Background
Unilever Nigeria Plc started as a soap manufacturing company, and is today one of the oldest surviving manufacturing organizations in Nigeria.
After series of mergers/acquisitions, the company diversified into manufacturing and marketing of foods, non-soapy detergents and personal care products.
These mergers/acquisitions brought in Lipton Nigeria Ltd in 1985 and Cheesebrough Ponds Industries Ltd in 1988. The company changed its name to Unilever Nigeria Plc in 2001.
Unilever Plc has 3.8 billion shares outstanding, with shareholder funds standing at N8.2 billion at the end of September 2013.
Financial Performance for September 2013
Unilever’s gross revenue for the months through September 2013 climbed by 9.6 percent to N45.6 billion from N41.6 billion recorded in the corresponding period Q3 2012.
Gross profits were up marginally by 7.09 percent to N16.6 billion in Q3 2013 compared with N15.5 billion recorded in 2012, due to a decrease in gross margin to 36.5 percent against 37.2 percent in 2012.
The company’s Profit before tax (PBT) for the nine months through September 2013 dipped or shrank by 12.3 percent to N5 billion from N5.7 billion as at third quarter (Q3) 2012.
After tax profits were down for the period under review by 12.5 percent to N3.5 billion from N4 billion recorded last year, hence a decrease in net profit margin to 13 percent as against 16.1 percent in 2012.
The decline in profits were fueled by soaring operating expenses which rose by 17.7 percent to N10.8 billion in the nine month period through September 2013 compared with N9.17 billion recorded in 2012.
Unilever’s interest expense rose by 52 percent to N989.2 million in the nine month period through September 2013, from N651.2 million in 2012.
The company’s total debt for the period under review rose by 39.5 percent to N6.7 billion from N4.8 billion in the corresponding period Q3 2012.
This explains the company’s total debt to equity ratio of 82 percent; furthermore, it means that lenders have financed 82 percent or about 4/5thof Unilever’s net assets.
Earnings per share EPS slowed by 12.3 percent to 0.93k in Q3 2013 from 106k in Q3 2012.
Share performance and outlook
The shareholders of Unilever Plc have had their returns maximized as the share price has risen by 26 percent in the past year.
The stock closed trading at N54.74 a share last Thursday and currently has a price to sales ratio of 3.7, signifying investors’ willingness to pay a high price for the company’s sales, although its P/S is less than peer company Nestle which trades at a price to sales ratio of 7.9
Unilever had a market capitalization of N206.4 billion as at January 21 2013
The company has been consistently giving returns to shareholders in form of dividend payment. In the period under review, Unilever has paid an interim dividend of N5.3 billion.
By: BALA AUGIE
