Final Quarter Surprise Powers Unilever To N8.5bn Profit In 2023 


Unilever Nigeria Plc followed an unexpected path to overturn its fortunes from a net loss of over N1 billion in the third quarter to a N6.9 billion profit in the final quarter.

That was enough for the company to make good the results of two disappointing quarters in the year and elevate the bottom line a clear 91 per cent to N8.5 billion for the full year.

The interim financial report of the home/personal care products manufacturer for the full year ended December 2023 shows a sudden change from impairment loss on receivables at the end of the third quarter to a big write-back in the final quarter delivered the master stroke.

The company ended the third quarter operations with a net impairment loss of N1.7 billion, which overturned unexpectedly to a net write-back of N5.5 billion in the final quarter.

The apparent windfall provided the saving grace for the company in the face of multiplying costs of production and finance and a loss from discontinued operations in the final quarter.

Production cost jumped by 190 per cent to almost N20 billion in the fourth quarter – three times the increase of 63.7 per cent in sales to N30.5 billion.

The increase in input cost consumed more than all the increase in sales revenue in the quarter and caused a drop of 9.2 per cent in gross profit to N10.7 billion.

Selling and distribution expenses added to the pressure at an increase of 74.8 per cent to N1.4 billion in the closing quarter.

Three upside functions saved the company’s day, led by the net impairment write-back on receivables that sprang from a marginal net loss in the same quarter in the preceding year to N5.5 billion.

The inflow was reinforced by cost savings from a drop of over N1 billion in marketing and administrative costs to N2.9 billion for the final quarter.

Added to these is a major upturn in other income from other losses of N59 million to N895 million over the same period.

The upside forces changed the company’s earnings reading from the drop in gross profit to an outstanding growth of 83.6 percent in operating profit to about N12.9 billion for the final quarter.

An impressive growth of 81 percent in finance income to N1.3 billion in the quarter helped to moderate finance expenses that surged from a positive figure of N318 million in the same period in the prior year to a cost of N3.9 billion in the fourth quarter.

The developments created a net finance cost of N2.6 billion in the closing quarter of the year, down from a net finance income of over N1 billion in the same quarter in 2022.

A drop of 37.8 percent in tax expenses to N1.9 billion for the quarter enabled a leap of 65.4 percent in profit from continuing operations to N8.3 billion. On the other hand, a loss of N1.5 billion from discontinued operations slowed down the increase in the bottom line to 8.4 percent to N6.9 billion in the closing quarter.

The high point of Unilever’s full-year closing numbers is the change in fortune from less than N1.7 billion profit at the end of the third quarter to a closing bottom line of N8.5 billion at full year – a major increase of over 91 percent in the year.

Sales revenue grew by more than one-half to N97.4 billion for the year but production cost rose much faster at 76.4 percent to N67.6 billion, claiming a good part of the gain in sales.

Selling and distribution costs grew by 48.5 percent to N3.9 billion but this was countered by a drop of 5.5 percent in the key cost line of marketing and administrative expenses to close at N13.3 billion.

Then came the net impairment write-back on receivables of N3.5 billion for the full year against a net loss of N322 million in the preceding year, making a big difference in the company’s earnings story in 2023.

Other income increased from other losses of N162 million to N987 million over the review period.

The cost-saving and revenue gains worked out an outstanding growth of 88 percent in operating profit to over N17 billion at the end of the year.

A big harvest rolled in from finance income that jumped by 156 percent to N3.4 billion in the year, which was more than sufficient to pay off finance costs of N3.2 billion and leave net finance income of N270 million.

Unilever closed the 2023 financial year with a pre-tax profit of N17.4 billion, which is an increase of 87 percent from N9.3 billion in 2022.

Profit from continuing operations rose by 88 percent to over N12 billion, which was lowered by loss from discontinued operations of N3.7 billion standing at N8.5 billion at the end of the year.

The company closed full-year operations with earnings per share of N1.49, rising from N1.04 per share in the preceding financial year.

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