WorldStage Newsonline– Unilever Nigeria (Unilever) has released a strong fourth quarter (Q4) 2017 results which showed that sales grew by 9% to N21.6bn while profit before tax (PBT) and profit after tax (PAT) advanced by 69% and 74% to N4.4bn and N2.6bn respectively.
The stronger growth seen on the bottom line was driven by a +659bp gross margin expansion to 35% and net finance income of N610m versus a net finance charge of –N98m in the corresponding quarter of 2016.
These positives were strong enough to offset a 23% increase in operating expenses. PAT grew faster (relative to PBT) due to a lower tax rate of 40% versus 42% in Q4 2016.
On a sequential basis, sales declined by 10% q/q, surprising negatively because Q4 is usually the strongest quarter for the company. However, PBT and PAT advanced by 146% q/q and 128% q/q respectively. The stronger bottom line was driven by 1) net positive finance income of N610m versus a net negative expense of –N1.0bn in the prior quarter, 2) a 338bp q/q gross margin expansion and 3) a -22% q/q decline in operating expenses.
On a full year basis, sales of N90.8bn grew by 30% while PBT and PAT advanced by 173% and 143% to N11.2bn and N7.5bn respectively. Net interest charges and operating expenses grew by 3% and 9% respectively. However, these were not strong enough to offset the strong sales growth and a 280bp y/y gross margin expansion to 32%.
Again, gross margin was above 30% for the third consecutive quarter. This can be attributed to the CBN’s intervention in the fx market through the NAFEX window. Unilever successfully raised N63bn via a rights issue last year. Management indicated that the proceeds will be used to settle foreign currency intercompany loans, support working capital and for capacity expansion.
Unilever declared a dividend of 50kobo per share versus consensus estimate of 56kobo. The dividend implies a yield of 1% and payout ratio of 39%. Year to date, Unilever shares have gained 34.2% and are tracking ahead of the index which is up 6.8% this year.
