April 29, 2025/Cordros Report

Unilever Nigeria Plc (UNILEVER) published their Q1-25 unaudited results after market close yesterday (28 April), reporting an earnings per share of NGN0.97 (Q1-24: NGN0.58), driven by solid top-line growth (+45.4% y/y).

UNILEVER grew revenue by 45.4% y/y (Q1-24: +57.8% y/y) in the period, due to significant expansions in the Food Products (+51.3% y/y | 58.6% of revenue), Personal Care (+29.6% y/y | 32.2% of revenue) and Beauty & Wellbeing (+76.4% | 9.2% of revenue) segments. We believe the top-line expansion was due to volume growth from deeper market penetration, supported by modest price increases to cushion rising input costs.

Despite the strong topline, gross margin declined by 165bps y/y to 40.1%, pressured by a 49.5% y/y rise in cost of sales, largely due to domestic inflationary pressures on raw material costs (+31.0% y/y). However, operating efficiency improved markedly, with EBITDA and EBIT margins expanding by 575bps y/y and 571bps y/y to 19.3% and 17.6%, respectively, buoyed by a sharp drop in OPEX margin (-699bps y/y to 23.0%).

Net finance income surged by 381.0% y/y to NGN2.48 billion (Q1-24: NGN516.28 million), supported by a 32.8% y/y increase in finance income.

Consequently, profit before tax jumped by 146.7% y/y to NGN10.75 billion (Q1-24: NGN4.36 billion), while profit after tax rose to NGN5.55 billion (Q1-24: NGN3.36 billion), despite a higher effective tax rate of 48.4% (Q1-24: 23.0%).

Comment: UNILEVER’s ability to drive sales through strategic market penetration and modest pricing, even amid input cost pressures, highlights the resilience of their operating model. Notably, the sharp improvement in operating efficiency — evidenced by significantly lower OPEX margin — supported margin recovery despite gross margin compression. Overall, this performance reinforces our view of a solid earnings trajectory for 2025E, although elevated input costs and tax charges could temper further bottom-line expansion. Our estimates are under review.