July 23, 2024/CSL Research
In its H1 2024 earnings report, Unilever Nigeria Plc. (Unilever) posted a 40.9%y/y Revenue growth, increasing to N63.91bn from N45.35bn in H1 2023. This growth was driven by both volume and price increases. The company’s food products segment was the largest contributor to total Revenue, with a 32.4% y/y growth to N37.13bn in H1 2024, up from N28.05bn in H1 2023. Most of the company’s sales were domestic, generating N61.95bn (+38.6% y/y) in H1 2024, compared to N44.69bn in H1 2023. Additionally, export sales saw a significant rise, reaching N1.96bn (+195.7% y/y) in H1 2024, up from N662m in H1 2023.
The Cost of Sales (excluding depreciation) increased by 17.1% y/y to N36.87bn in H1 2024, up from N31.48bn in H1 2023. This resulted in a Gross Profit of N27.04bn, a 95.0% y/y increase from N13.87bn in H1 2023. Consequently, the gross profit margin grew to 42.3%, up 11.7 ppts from 30.6% in H1 2023.
The company’s Total Operating Expenses (excluding depreciation) rose to N19.37bn in H1 2024, compared to N7.96bn in H1 2023, bringing the OPEX margin to 35.3%, up from 21.2% in H1 2023. This increase was primarily driven by a significant rise in Marketing and Administrative Expenses (excluding depreciation), which surged 164.2% y/y to N16.93bn in H1 2024 from N6.41bn the previous year. Additionally, Selling and Distribution Expenses (excluding depreciation) grew by 57.4% y/y to N2.44bn in H1 2024, up from N1.55 bn in H1 2023.
The company recorded an Impairment Loss of N3.17bn in H1 2024 from N1.66bn in H1 2023. This brought Unilever’s EBITDA to N4.51bn in H1 2024 from N4.25bn in H1 2023 while its EBITDA margin was down by 2.3ppts to 7.1% in H1 2024 from 9.4% in H1 2023. Depreciation and Amortisation was up by 6.2% y/y to N1.16bn in H1 2024 from N1.09bn in H1 2023 leading to an Operating Profit of N3.35bn in H1 2024 (+6.1% y/y) from N3.16bn in H1 2023. Its Other Income of N105m in H1 2024 from N48m in H1 2023 brought its EBIT to N3.46bn in H1 2024 from N3.21bn in H1 2023.
Unilever reported Finance Income of N4.10bn in H1 2024 down from N4.45bn in H1 2023. This decrease was due to lower interest received from its bank accounts, which fell to N81om in H1 2024 from N1.51bn in H1 2023. However, a significant contribution to the company’s Finance Income came from FX gains, which increased to N3.92bn in H1 2024 from N2.93bn in H1 2023. On the other hand, Finance Costs declined by 29.1% y/y to N1.28bn in H1 2024, down from N1.80bn in H1 2023. This reduction was primarily due to a decrease in interest on third-party bank loans, which dropped to N1.17bn in H1 2024 from N1.72bn in H1 2023. Consequently, Net Finance Income rose by 6.8% y/y to N2.83bn in H1 2024, up from N2.65bn in H1 2023.
Overall, the company’s Profit Before Tax increased by 7.3% y/y to N6.28bn in H1 2024 compared to N5.85bn in H1 2023. After accounting for an income tax of N1.85bn, Profit after Tax grew to N4.44bn, up from N2.76bn in H1 2023.
We have a Buy recommendation on Unilever and a target price of N26.06/s. Current Price: N18.1/s.
Kindly click on the below link to download the full report.
UNILEVER H1 2024 Quick Take.pdf
