Unilever Nigeria Reports Strong Revenue Growth Despite Cost Pressures
Unilever Nigeria Plc has reported a pre-tax profit of N13.96 billion for the first nine months ending September 30, 2024, reflecting 31% growth year-on-year. This comes as the company saw a 46% revenue surge to N103.8 billion, attributed to operational efficiency, market expansion, and purposeful branding.
Revenue Surge Amid Cost Pressures
Despite the revenue growth, rising costs have impacted Unilever’s profit margins. Cost of sales climbed by 61% to N67.8 billion, outpacing revenue growth and reducing gross profit margins from 35% in 2023 to a recovering 41.3% in 2024, still below the five-year average of 44%.
Increased Operating Expenses
Operating costs saw a sharp increase, with administrative and marketing expenses up 145% to N25.6 billion, largely driven by the naira’s devaluation, inflation, and heightened media spending for brand visibility in personal care and nutrition segments. As a result, the operating profit margin declined to 9.8%, raising concerns about cost control.
Pre-Tax Margins and Market Performance
Unilever’s pre-tax profit margin fell 11% to 13.44%, despite gains from foreign exchange differences. Return on equity stands at 13.56%, which, while modest, suggests cautious optimism from investors. Unilever’s stock has gained 41.2% year-to-date as of October 23, 2024, showing strong market sentiment following recent financial performance.
The company’s focus on balancing growth investments with cost management will be essential for sustaining shareholder value and stabilizing profitability.
Source: Nairametrics