July 24, 2014/ DLM Research
1H’14 revenue declines by 1.3% y/y. In its six months to June 2014 result, Unilever Nigeria recorded a decline of 1.3% y/y in revenue to N29.28billion compared with N29.67billion in 2013. Also, the reported revenue is lower than our estimate of N29.78billion by 1.7%. On a quarterly basis, the company posted revenue of N15.45billion in 2Q2014, down by 0.1% compared with the revenue of N15.43billion recorded in 2Q2013 and higher by 11.7% against N13.83billion reported in 1Q2014. Similarly, the reported revenue in 2Q2014 is lower than our estimate of N15.94billion by 3.1%.
Gross profit improves due to a higher decline in input cost. For the review period, Unilever’s cost of sales (COS) of N18.28billion is lower than N18.81billion reported in the first half year of 2013 by 2.8%. The higher y/y decline in the COS compared with the y/y decline in revenue resulted in a marginal decline in COS/revenue ratio to 62.4% relative to 63.4% in the same period of 2013. On a quarterly basis, the company reported COS of N9.69billion in 2Q2014, up by 12.9% compared with N8.59billion in the first quarter of 2014 and lower by 0.7% against N9.77billion recorded in 2Q2013. Therefore, gross profit increased by 1.3% y/y to N11.00billion compared with N10.86billion in 2013 resulting in an improved gross profit margin of 37.6% relative to 36.6% in 2013.
Increase in running expense depressed operating profit. For the six months to June 2014, Unilever Nigeria recorded operating expenses of N8.32billion, up by 27.6% compared with the N6.52billion posted in 2013. On a quarterly basis, the company reported operating expenses of N4.49billion in 2Q2014, i.e. an increase of 23.8% and 17.4% compared with the N3.63billion and N3.83billion respectively posted in 2Q2013 and 1Q2014. Consequently, operating expenses/revenue ratio moved up to 28.4% relative to 22.0% in the previous year.
Click Here To Download Full Report
Disclaimer/Advice to Readers: While the website is checked for accuracy, we are not liable for any incorrect information included. The details of this publication should not be construed as an investment advice by the author/analyst or the publishers/Proshare. Proshare Limited, its employees and analysts accept no liability for any loss arising from the use of this information. All opinions on this page/site constitute the authors best estimate judgement as of this date and are subject to change without notice. Investors should see the content of this page as one of the factors to consider in making their investment decision. We recommend that you make enquiries based on your own circumstances and, if necessary, take professional advice before entering into transactions. This article is published with the consent of Dunn Loren Merrifield, the author(s) for circulation to the online investment community in accordance with the terms of usage. Further enquiries should be directed to the author whose e-mail is Dunn Loren Merrifield Limited [Email:email@example.com] otherwise comments should be sent to firstname.lastname@example.org