NIGERIA | FMCG | Unilever Nigeria Plc

Quick take: Higher prices and volumes increase top-line

Unilever Nigeria Plc. recently released its Q1 2024 financial results, showing a significant uptick in revenue. Excluding its discontinued operations in the Home Care segment, the company's Revenue surged by 57.8% y/y, reaching N32.32bn compared to N20.48bn in Q1 2023. This boost was fueled by both increased volume production and adjustments to product prices. Among its product categories, Food Products emerged as the primary contributor to the company's revenue growth increasing by 36.4% y/y to N18.18bn up from N13.33bn in Q1 2023. Following the cessation of its Home Care Segment, the company's Revenue composition shifted. In Q1 2024, the Personal Care segment contributed N11.68bn, accounting for 36.1% of the company's total revenue, while the Beauty & Wellbeing segment contributed N2.45bn, representing 7.6% of the company's top line.

Unilever's Cost-of-Sales (adjusted for depreciation) rose significantly by 77.7% y/y to N18.43bn in Q1 2024 from N10.37bn in Q1 2023, bringing Gross Profit to N13.89bn (+37.4% y/y) in Q1 2024 from N10.11bn in Q1 2023 while its Gross Profit Margin declined to 43.0% (-6.4ppts) from 49.4%. Furthermore, its total Operating Expense (adjusted for depreciation) came in higher at N9.53bn in Q1 2024 from N4.67bn in Q1 2023. Its renewed brand and marketing strategy and elevated overheads led to its Marketing and Administrative Expenses (adjusted for depreciation) increasing to N8.25bn (+112.5% y/y) in Q1 2024 from N3.88bn in the prior year. Similarly, its Selling and Distribution Expenses (adjusted for depreciation) grew to N1.28bn (+62.4% y/y) in the period from N785m in Q1 2023.

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The company recorded a writeback on trade and other receivables of N4m in Q1 2024 from a Loss of N263m in Q1 2023. Unilever's EBITDA was down to N4.37bn in Q1 2024 from N5.18bn in Q1 2023 and its EBITDA margin was down by 11.8ppts to 13.5% in Q1 2024 from 25.3% in Q1 2023. Depreciation and Amortisation went up moderately to N548m in Q1 2024 from N541m in Q1 2023 leading to an Operating Profit of N3.82bn in Q1 2024 (-17.6% y/y) from N4.64bn in Q1 2023. The company reported Other Income of N25m in Q1 2024 from N23m in Q1 2023. Overall, EBIT was down to N3.84bn in Q1 2024 from N4.66bn in Q1 2023.

The company's Finance Income was N2.00bn in Q1 2024 from N236m in Q1 2023 as Unilever reported FX gain of N1.64bn in Q1 2024 compared with N88m in Q1 2023 as well as a higher interest received on its bank accounts of N364m in Q1 2024 from N148m in Q1 2023. On the flip side, Finance Cost soared to N1.48bn in Q1 2024 from N396m in Q1 2023 as the Interest on its third-party bank loans increased to N1.43bn in Q1 2024 from N354m in Q1 2023. Consequently, the Net Finance Income came in at N516m in Q1 2024 from a Loss of N160m in Q1 2023. Overall, the company's Profit Before Tax was N4.36bn (-3.1% y/y) in Q1 2024 from N4.45bn in Q1 2023 while its Profit After Tax came to N3.36bn in Q1 2024 from N2.67bn in Q1 2023.

We have a Buy recommendation on Unilever with a target price of N26.06/s. Current Price: N13.60/s.

Kindly click on the below link to download the full report.

"‹"‹"‹UNILEVER-Q1-2024-Quick-Take.pdf"‹"‹"‹

"‹"‹"‹"‹"‹"‹"‹Kind Regards,

Sunmisola Ikoli-Oluwo

Email: CSLResearch@fcmb.com"‹

Address: 44 MARINA, LAGOS ISLAND, "‹

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