Border Closure Plunges Unilever into N8bn Loss as Revenue Drops

By Dipo Olowookere

The board of Unilever Nigeria Plc, one of the consumer goods companies listed on the Nigerian Stock Exchange (NSE), has released the financial statements of the firm for the year ended December 31, 2019.

However, the performance of the organisation was not impressive as the border closure negatively impacted on the company’s figures, with both topline and bottomline pointing south.

In the unaudited interim earnings of the firm released to the NSE last Thursday, revenue depreciated by 34 percent to N60.8 billion from N92.0 billion achieved in the 2018 fiscal year, just as the cost of sales closed at N54.1 billion versus N64.6 billion, with the gross profit reducing to N6.7 billion from N27.4 billion.

Also, the selling and distribution expenses were slashed by the firm to N3.2 billion from N4.2 billion, while the marketing and administrative expenses were pruned to N13.2 billion from N14.7 billion, with other income down to N65.4 million from N2.3 billion.

In the period under review, Unilever Nigeria, which has some of its operations done from neighbouring Ghana, announced an operating loss of N10.4 billion against an operating profit of N10.4 billion in 2018 financial year. A further analysis of the results by Business Post showed that the finance income reduced to N2.9 billion from N3.6 billion, while the finance costs rose to N824.2 million from N452.6 million.

In the period under review, the company declared a loss before tax of N8.3 billion versus a profit before tax of N13.6 billion in 2018 and a loss after tax of N4.2 billion in FY 2019 against a PAT of N10.0 billion. It was observed that the firm had a tax credit of N4.1 billion in the 2019 financial year.

At the close of business on December 31, 2019, Unilever Nigeria had a negative earnings per share of 74 kobo compared with N1.77 EPS in the corresponding period of 2018.

Business Post reports that the company’s performance in the last quarter of last year was very abysmal as revenue significantly went down by 58 percent to N9.1 billion from N21.7 billion as marketing and administrative expenses rose to N5.2 billion from N3.5billion, leaving it with a gross loss of N3.0 billion against a profit of N6.5 billion in the same quarter of 2018.

Also, Unilever Nigeria said it had an operating loss of N9.6 billion in Q4 2019 versus a profit of N1.9 billion in Q4 2018, while it posted a pre-tax loss of N9.0 billion against a pre-tax profit of N2.9 billion in the same period of 2018, with a post-tax loss of N4.8 billion in contrast to a post-tax profit of N2.1 billion in the fourth quarter of 2018.

Last August, the Nigerian authorities closed the land borders to curtail smuggling of goods and arms into the country. This pushed inflation up to nearly 12 percent as at December 2019. It is not certain if the borders would be re-opened soon as federal government said the country’s neighbours must agree to step up efforts to tackle smuggling.