Unilever Nigeria 2022 Fourth Quarter Earnings Hits Seven Year High On Reduced Costs

Unilever Nigeria Plc, published its fourth quarter unaudited results for the period ended December 31, 2022, showing a standalone EPS of NGN1.10 against EPS of NGN0.68 in fourth quarter 2021, bringing 2022FY EPS to NGN1.04 (2021FY EPS: NGN0.59).

The growth in earnings was due to the expansion in gross margin (+105.5% y/y) following a 30.5% y/y decline in cost of sales. Q4-22 revenue grew by 14.9% y/y (2022FY: +25.8% y/y), driven by increased sales across the Food Products (+24.8% y/y | 50.0% of revenue) and HPC (+6.4% y/y | 50.0% of revenue) segments.

Sequentially, revenue increased by 14.3% on a q/q basis, following increases from the Food Products (+10.9% q/q) and HPC (+17.8% q/q) business lines.

Gross margin for the quarter reached its highest point in at least seven years, as it expanded by 26.32ppts to 59.7% (Q4-21: 33.4%), reflective of the decline in cost of sales (-30.5% y/y). Consequently, EBITDA (+17.49ppts) and EBIT (+22.42ppts) margins recorded expansions amid a 39.1% y/y increase in operating expenses.

Unilever reported a net finance income of NGN1.36 billion for Q4-22, owing to a higher finance income (Q4-22: NGN947.57 million | Q4-21: Nil) print for the period. We highlight that the significant finance income in the period reflects the increase in interest on call deposits and bank accounts.

Overall, PBT grew by 360.2% y/y to NGN9.39 billion in Q4-22 (Q4-21: NGN2.04 billion). Following a tax charge of NGN3.05 billion, the company recorded a PAT of NGN6.34 billion (Q4-21: NGN1.55 billion).