July 22, 2026/Cordros Report
Unilever Nigeria Plc (UNILEVER) published its Q2-26 unaudited results (21 July), reporting EPS of NGN1.49, down 3.1% y/y, which brought H1-26 EPS to NGN2.72 (+8.3% y/y). The softer quarterly earnings reflected an 18.9% y/y increase in operating expenses and a 57.8% y/y surge in tax expense, which more than offset the benefit of healthy top-line growth. Nonetheless, the board declared an interim dividend of NGN2.00/share, translating to a dividend yield of 1.6%.
UNILEVER grew revenue by 18.8% y/y in Q2-26 (H1-26: +22.2% y/y), reflecting the residual benefits of prior price increases alongside modest volume recovery. Food Products remained the key growth driver, with revenue expanding 26.3% y/y (H1-26: +31.3% y/y), increasing its contribution to group revenue to 64.8% from 61.0% a year earlier (Q1-26: 63.7%). Beauty & Wellbeing also posted healthy growth of 13.6% y/y, contributing 9.9% of group revenue. Meanwhile, Personal Care grew modestly by 4.7% y/y (H1-26: +4.7% y/y) and accounted for 24.9% of sales, reflecting continued pressure on discretionary consumer spending.
Sequentially, group revenue increased by 2.7% q/q, driven by stronger sales in Beauty & Wellbeing (+10.9% q/q) and Food Products (+4.4% q/q), which more than offset the 4.5% q/q decline in Personal Care.
Gross margin expanded by 79bps y/y to 46.3% in Q2-26 (H1-26: +271bps y/y to 45.6%), as revenue growth (+18.8% y/y) slightly outpaced cost of sales growth (+17.1% y/y | H1-26: +16.4% y/y). Consequently, EBIT and EBITDA margins expanded by 57bps y/y and 60bps y/y to 21.2% and 22.5%, respectively (H1-26: +114bps y/y and +95bps y/y to 20.3% and 21.6%, respectively), underpinned by gross margin expansion and slower OPEX growth (+18.8% y/y vs. +31.9% y/y in Q2-25). The moderation in OPEX growth reflected a 30.4% y/y decline in overheads and a 27.7% y/y reduction in royalties and service fees, which more than offset a 76.5% y/y increase in brand and marketing expenses.
Net finance income edged up 0.7% y/y to NGN2.88 billion (H1-26: NGN4.82 billion), supported by a 4.8% y/y decline in finance costs; finance income increased marginally by 0.2% y/y.
Accordingly, PBT grew 17.6% y/y in Q2-26 (H1-26: +20.8% y/y), reflecting a normalization in earnings growth following the exceptionally strong base recorded in the prior year. However, an 11.61ppt y/y increase in the effective tax rate to 45.5% (H1-26: 46.5%) weighed on bottom-line performance, resulting in a 3.1% y/y decline in PAT (H1-26: +8.3% y/y).
Comment: UNILEVER’s H1-26 earnings were underpinned by strong revenue growth, led by the Food Products segment. However, OPEX growth (+29.8% y/y) outpaced revenue growth (+22.2% y/y), limiting margin expansion despite ongoing cost optimization. Meanwhile, the higher effective tax rate constrained EPS growth. Looking ahead, energy cost dynamics, sustained volume recovery, and disciplined direct cost management will be critical to further improving operating leverage and driving earnings growth. Our estimates are under review.
