Unilever Nigeria Plc reported stronger sales and improved operating margins for the six months ended June 30, 2026, but a sharp increase in taxation and finance costs limited growth in its bottom line.
Revenue rose by 22.2 percent to ₦119.92 billion from ₦98.10 billion in the corresponding period of 2025, demonstrating continued demand for the company’s consumer products despite pressure on household purchasing power.
Gross profit increased by 30 percent to ₦54.74 billion as revenue grew faster than production costs.
Consequently, the gross profit margin improved to 45.6 percent from 42.9 percent, suggesting that pricing, product mix and cost management helped offset inflationary pressures.
Operating profit advanced by 29.5 percent to ₦24.36 billion, while the operating margin strengthened to 20.3 percent from 19.2 percent.
This represents one of the strongest aspects of the result, as Unilever converted a larger proportion of sales into operating earnings.
However, operating expenses continued to rise. Selling and distribution expenses jumped by 58.8 percent to ₦4.77 billion, substantially exceeding revenue growth.
Marketing and administrative expenses also increased by 25.7 percent to ₦26.39 billion.
The rapid increase in distribution spending may reflect higher logistics, transportation and market-expansion costs. While these investments could support future sales, investors will need to determine whether subsequent revenue growth justifies the additional expenditure.
Finance income increased by 11.8 percent to ₦6.51 billion, but finance costs more than tripled to ₦1.70 billion from ₦483.50 million. This reduced net finance income by 9.8 percent to ₦4.82 billion.
Profit before tax nevertheless rose by 20.8 percent to ₦29.18 billion. The improvement was primarily supported by the company’s core operations rather than non-operating gains, strengthening the underlying quality of the performance.
The major constraint was taxation. Unilever Nigeria’s tax expense climbed by 39.3 percent to ₦13.58 billion, taking the effective tax rate to approximately 46.5 percent from 40.4 percent a year earlier.
As a result, profit after tax increased by only 8.3 percent to ₦15.60 billion, significantly below the growth recorded in revenue, gross profit and operating profit. Net profit margin consequently declined to 13 percent from 14.7 percent.
Basic and diluted earnings per share rose to ₦2.72 from ₦2.51.
Second-Quarter Performance Raises Caution
The standalone second-quarter numbers reveal greater pressure at the bottom-line level.
Revenue for the three months ended June 30 increased by 18.8 percent to ₦60.75 billion, while gross profit rose by 20.9 percent to ₦28.12 billion. Operating profit also advanced by 22.1 percent to ₦12.87 billion.
Despite these gains, quarterly profit declined by 3.1 percent to ₦8.58 billion from ₦8.85 billion. Earnings per share fell to ₦1.49 from ₦1.54.
The decline was largely attributable to a 57.8 percent increase in quarterly taxation to ₦7.18 billion. The effective tax rate reached approximately 45.5 percent, compared with 33.9 percent in the second quarter of 2025.
Investor Assessment
Unilever Nigeria’s first-half performance is operationally positive. Double-digit revenue growth, gross-margin expansion and a stronger operating margin indicate improving pricing power and production economics.
However, three issues require attention:
- Distribution expenses are growing much faster than revenue.
- Finance costs have increased sharply.
- The elevated effective tax rate is preventing operating growth from translating fully into shareholder earnings.
The company remains profitable and its core business appears stronger, but the modest increase in earnings per share shows that higher sales alone will not guarantee equally strong shareholder returns.
Sustained margin improvements, tighter control of distribution costs and moderation in the tax burden will be important during the second half of 2026.
