UNILEVER: Strong topline supports FY'24 earnings

Unilever Nigeria Plc (NGX: UNILEVER "" TP: N40.07), in its unaudited FY'24 results, delivered a solid performance, reporting an 88.5% YoY surge in PAT to N15.91 billion. This was underpinned by robust revenue growth of 44.2% YoY to N149.75 billion, alongside the absence of loss from the company's discontinued operations.

Notably, the robust revenue growth was linked to the improvement in sales (+46.8% YoY to N92.83 billion) of the company's Nutrition segment. Similarly, the Personal Care, and Beauty & Wellbeing products recorded upticks of 32.8% YoY and 72.5% YoY to settle at N43.97 billion and N12.95 billion, respectively. Cumulatively, the Nutrition segment contributed 62.0% to total revenue, while Personal Care and Beauty & Wellbeing contributed 29.4% and 8.6%, respectively, to total revenue for the period. 

On the cost side, inflationary pressures and higher raw material prices drove a 30.6% YoY increase in the cost of sales to N94.02 billion. However, gross profit margins improved by 6.5 ppts to 37.2% due to a revaluation gain of N4.58 billion (vs a loss of N11.10 billion in FY'23). Elsewhere, an increase in selling, general, and administrative (SG&A) expenses (+127.1% YoY to N36.3 billion) led to a decline in operating margins to 11.8% (vs 19.5% in FY'23). This SG&A surge is largely due to brand marketing costs, media expenses, and other inflation-related pressures. 

Finance income jumped 53.3% YoY, driven by foreign exchange (FX) gains (+290.8% YoY) and higher interest on deposits, while finance costs eased slightly (-0.4% YoY) as interest on third-party bank loans declined. Consequently, pre-tax profit (PBT) and PAT margins stood at 14.5% and 10.6%, respectively, despite a higher effective tax rate.

Unilever's return metrics also strengthened, with improvements across both return on equity (ROE) and return on assets (ROA), reflecting its enhanced profitability and operational efficiency.

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