Unilever Nigeria Plc, one of the leading consumer goods companies in the country, recently unveiled its unaudited financial results for the second quarter of 2023.
The report indicated a staggering 72.95% drop in pre-tax profits, settling at N169.9 million. The company faced significant challenges as operating costs soared, leading to an operating loss of N3.2 billion for the quarter.
Inflation’s Heavy Toll: The relentless surge in inflation rates proved to be a major obstacle for Unilever Nigeria’s financial performance in Q2 2023. With a 22.79% increase in the inflation rate in June, businesses and consumers alike were grappling with the escalating costs of goods and services. Unilever found itself in the crosshairs of this economic turmoil as the rising expenses outpaced its revenues.
Revenue Surge, but at a Cost: Despite the uphill battle with inflation, Unilever managed to witness a 27.31% increase in revenue, reaching N29.60 billion compared to N23.25 billion in the corresponding quarter of the previous year. The surge was primarily driven by the remarkable performance of the company’s main business segments: food products and home & personal care.
The food products segment exhibited significant growth, generating N14.72 billion in revenue, a notable increase from N10.43 billion during the same period last year. Simultaneously, the home & personal care segment contributed significantly, recording revenue of N14.88 billion compared to N12.81 billion in Q2 2022.
Unforeseen Obstacles and Losses: The company suffered losses amounting to N3.28 billion, primarily attributed to the rising costs of sales. Moreover, restructuring expenses, including raw and packaging materials written off due to the stoppage of production in the home care category and associated redundancy costs, further weighed down the company’s performance.
Key Financial Highlights: The financial report shed light on several crucial aspects of Unilever Nigeria’s performance during the second quarter of 2023:
- Revenue for the quarter increased to N29.60 billion from N23.25 billion in the corresponding quarter of 2022, demonstrating a growth of 27.31%.
- Cost of sales surged to N27.11 billion compared to N16.22 billion recorded during the same period last year, impacting gross profit significantly.
- Gross profit took a considerable hit, declining to N2.49 billion from N7.03 billion reported in Q2 2022.
- Pre-tax profit plummeted by 72.95%, with the figure now standing at N169.94 million, down from N628.28 million in the previous year’s Q2.
- Cash flow for the half-year ended on June 30, 2023, amounted to N82.73 billion, marking an impressive increase of 30.53% from N63.38 billion recorded in the same period last year.
Unilever Nigeria remains optimistic about its future prospects, despite the challenges faced during the second quarter.
The company aims to adopt strategic measures to navigate through the current economic climate, ensuring stability and growth in the quarters to come.
As the broader economic landscape evolves, all eyes will be on Unilever Nigeria’s next moves to reclaim its financial strength and continue its legacy as a prominent player in the consumer goods sector.
Manufacturers Cut Spending on Alternative Energy Sources as Electricity Supply Improves
Nigerian manufacturers reduced their spending on alternative energy sources by 21.25% to N60.4 billion in the first half of 2023, according to the Manufacturers Association of Nigeria (MAN).
This decline is attributed to the increased availability of electricity from the national grid, which improved to 11.3 hours per day, up from 10.2 hours in the same period of 2022.
The report also indicated a slight increase in daily power outages to 4.7 times from 4.4 times in H1 2022.
These improvements in grid electricity availability have positively impacted the manufacturing sector’s energy expenditure, leading to a significant drop from N76.7 billion spent in the second half of 2022.
However, the initial high expenditure on alternative energy sources was driven by skyrocketing diesel prices.
The cost of diesel had surged due to foreign exchange challenges and the implementation of a 7.5% Value Added Tax on Automotive Gas Oil (diesel).
Diesel prices in many states had risen to between N900 and N950 per liter, which threatened the production capacity of numerous manufacturing entities.
The Nigerian Textile Manufacturers Association expressed concerns about the potential closure of textile factories and job losses due to rising energy costs. Textile manufacturers, in particular, found it challenging to afford diesel at such prices.
The Chief Executive Officer of Coleman Technical Industries Limited also highlighted the increased production costs associated with higher diesel prices.
While the improvement in electricity supply is a positive development for manufacturers, the industry remains vigilant about energy costs and their impact on production.
Dangote Group Subsidiaries Contribute N474 Billion in Taxes to Federal Government Over Three Years
In a significant testament to its commitment to corporate citizenship and financial responsibility, three subsidiaries of the Dangote Group have revealed that they paid a substantial total of N474 billion in taxes to the Federal Government over the past three years.
The disclosure was made by Hashem Ahmed, an official representing the multibillion-dollar conglomerate, during the opening ceremony of the 18th Abuja International Trade Fair, which focused on the theme ‘Sustainable financing and taxation as drivers of the new economy.’
The Dangote Group, led by its President Aliko Dangote, stands as not only the largest private-sector employer but also the country’s leading taxpayer. The remarkable N474 billion contribution was primarily made by Dangote Sugar, Dangote Cement, and Dangote Salt.
Also, the group has a longstanding history of extensive financial support, empowerment initiatives, corporate social responsibility programs, sponsorships, and philanthropic endeavors, amounting to several billions of naira.
Hashem Ahmed also expressed the group’s satisfaction with the Federal Government’s commitment to tax reform policies aimed at broadening the tax base and providing essential funding for infrastructure development in the country.
The Minister of Industry, Trade, and Investment, Doris Uzoka-Anite, who spoke at the event, announced the government’s comprehensive plan to support small businesses and startups amid Nigeria’s economic challenges.
The plan includes a N75 billion investment by March 2024 to bolster the manufacturing sector, grants for microbusinesses in every local government, and a N75 billion fund to support up to 100,000 startups and MSMEs at favorable interest rates repayable over 36 months.
The government has also initiated partnerships with tech giants like Microsoft and the African Development Bank, signaling a bright future for Nigeria’s economic growth and innovation.
Dangote Industries Set to Revolutionize Agriculture Industry with Mega Merger, Creating Dangote Foods Plc
Dangote Industries Limited has unveiled plans for a merger that will give rise to a formidable entity known as Dangote Foods Plc.
This colossal conglomerate is poised to transform the agriculture industry and enhance food security across the nation.
The merger will combine three subsidiaries of Dangote Industries Limited, including Dangote Sugar Refinery, Dangote Salt, and Dangote Rice, resulting in a diversely profitable mega-company.
The fusion, scheduled for completion by the end of 2023 pending regulatory approvals, promises to yield significant benefits for all stakeholders, notably shareholders.
Dangote Sugar Refinery’s Group Managing Director and CEO, Mr. Ravindra Singhvi, highlighted the merger’s strategic importance, stating its potential to create substantial shareholder value.
The amalgamation will not only generate cost-saving synergies but also expand product offerings and revenue streams.
Dangote Foods Plc is set to become a powerhouse in the market, boasting a wide array of products, including sugar, salt, tomato, and rice, among others. This merger will facilitate broader distribution capabilities and increased operational efficiency through synergy.
The journey towards this monumental merger began when Dangote Sugar Refinery notified the Nigerian Exchange Limited of its intention to merge with NASCON Allied Industries Plc and Dangote Rice Limited, both subsidiaries of Dangote Industries Limited.
This move marks a pivotal moment in the corporate history of Nigeria, with Dangote Industries Limited reaffirming its commitment to driving growth, innovation, and food security for the nation.
As regulatory approvals progress, Dangote Foods Plc is poised to emerge as a prominent player in Nigeria’s agricultural landscape, ultimately paving the way for a brighter and more sustainable future for the country.
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