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Quick take: Disappointing Q3 renews growth concerns

Unilever Nigeria Plc in its just-published H1 2019 result announced a 28.6% y/y decline in Revenue to N51.6 billion in 9M 2019.

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Quick take: Disappointing Q3 renews growth concerns, Unilever Nigeria Plc announces close period for 2020 Q1 unaudited financial accounts

Unilever Nigeria Plc in its just-published H1 2019 result announced a 28.6% y/y decline in Revenue to N51.6 billion in 9M 2019 from N72.3 billion in 9M 2018 following an underwhelming Q3 2019. In Q3, Revenue plunged 61.7% q/q and 62.9% y/y to N9.0 billion. The steep decline in Revenue for Q3 came in as a surprise causing 9M Revenue to miss our 9M estimate of N69.2 billion. As our estimates show, we anticipated a moderate decline in Revenue for Unilever.

Our findings show that the steep Revenue decline in Q3 may be partly due to the company’s decision to stop extending credit to suppliers leading to reduced demand. A 33.7% q/q decline in Trade Receivables supports this assumption. The company last recorded this magnitude of decline in Receivables in Q4 2018 where it was down 31.8% q/q and Revenue declined in tandem by 14.8%.

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[READ MORE: Quick Take: Poor performance extends into Q3]

The company’s two product segments were pressured within the quarter which compounded an already weak H1 2019. The Home and Personal Care (HPC) business suffered the biggest weakness declining 34.6% y/y to N25.0 billion in 9M 2019 and 69.8% q/q to N3.7 billion in Q3 2019. In addition, the Food Products business segment fell 21.9% y/y to N26.7 billion in 9M 2019 and 56.1% q/q to N5.3 billion in Q3 2019.

Cost of Sales (adjusted for Depreciation) declined by 15.4% y/y to N40.6 billion in 9M 2019 from N48.0 billion in 9M 2018 largely on the back of lower volumes. On a q/q basis, Cost of Sales fell by 36.6% q/q to N10.2 billion in Q3. The faster decline in Revenue and per unit cost pressures saw Gross Profit decline by 54.7% y/y to N11.0 billion while the company recorded a Gross loss of N1.3 billion in Q3 2019. Input cost continue to pressure operating performance as high cost of industrial heavy Linear Alkyl Benzene continues to pressure margins in the HPC business. Overall business Gross margin dipped 12.2ppts y/y to 21.3% for 9M 2019.

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In the face of pressured Revenues and input costs, management has maintained its strategy of keeping the lid on Operating Costs. Thus, Marketing & Administrative Expenses, as well as Selling & Distribution Expenses adjusted for depreciation, dipped 35.2% y/y and 20.7% y/y to N7.2 billion and N2.2 billion respectively for 9M 2019. Despite the decline in Operating Expenses, EBITDA declined 87.3% y/y to N1.3 billion in 9M 2019 from N10.4 billion in 9M 2018 while EBITDA margin fell 11.9ppts y/y to 2.6%. Despite lower Depreciation Charge (down 3.1% y/y to N2.1 billion), the company recorded Operating loss of N0.8 billion in 9M 2019 compared to Operating Profit of N8.2 billion in 9M 2018.

The company recorded Profit before Tax of N0.6 billion in 9M 2019 despite the Operating Loss recorded as the company booked Net Finance Income which was down 35.6% y/y to N1.4 billion.The decline in Net Finance Income was driven by decline in Cash & Cash Equivalents (down 47.5% y/y to N30.0 billion) for the period. Overall, Net Income was down 94.3% y/y to N0.5 billion from N9.6 billion in 9M 2019 while the company recorded a loss of N3.0 billion in Q3 2019 which compares with a Net Profit of N2.0 billion in Q2 2019 and N3.8 billion in Q3 2018.

[READ ALSO: Quick take: Earnings beat estimates on strong Non Interest Income and write backs]

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We recall expressing concerns on the operations of Unilever from end 2018 into Q1 2019. Though Q2 performance gave room for some optimism, Q3 performance has deepened our concerns. We believe Unilever’s core business in the HPC segment is under severe pressure due to the availability of steeply discounted alternatives to the company’s product.

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Member of the Nigerian Stock Exchange,

First City Plaza, 44 Marina,

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NIGERIA.

Patricia
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Business

CBN directs dealers to immediately discontinue maize importation

Dealers are to return their forms on or before Wednesday, July 15, 2020.

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CBN Bans Maize Importation

The Central Bank of Nigeria (CBN) has directed all authorised dealers to immediately discontinue the processing of Forms M for maize/corn importation into the country. This directive is contained in a notice that was addressed to authorised dealers and signed by Dr O.S Nnaji, CBN’s Director in charge of Trade and Exchange Department.

In the notice which was made available to the public earlier today, the CBN noted four main reasons for the directive to discontinue maize importation, The reasons are:

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  • To increase local production
  • To stimulate a rapid economic recovery
  • To safeguard rural livelihoods
  • To increase jobs

In line with this development, all the authorised dealers have been told to return all the Forms M they have already registered for the purpose of importing maize. They are to return the forms on or before Wednesday, July 15, 2020. The notice by the CBN said:

“As part of efforts by the Central Bank of Nigeria to increase local production, stimulate a rapid economic recovery, safeguard rural livelihoods, and increase jobs which were lost as a result of the ongoing COVID-19 pandemic, Authorised Dealers are hereby directed to discontinue the processing of Forms M for the importation of Maize/Corn with immediate effect. 

“Accordingly, all Authorised Dealers are hereby requested to submit the list of Forms M already registered for the importation of Maize/Corn using the attached format on or before the close of business on Wednesday July 15, 2020. Please ensure strict compliance.”

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You may see a copy of the CBN notice along with ‘the attached format’ by clicking here.

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Economy & Politics

4.48 million beneficiaries apply for N-Power jobs in 16 days

The Minister for Humanitarian Affairs, Disaster Management and Social Development announced on Twitter.

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4.48 million beneficiaries apply for N-Power jobs in 16 days

The Federal Government have announced that it has received 4.48 million applications from beneficiaries for the Batch C of its N-Power programme within 16 days.

The N-Power 2020 recruitment portal which opened on Friday, June 26, 2020, at 11.45 pm is the third batch of the programme

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This was disclosed in a tweet post by the Minister for Humanitarian Affairs, Disaster Management and Social Development, Sadiya Umar Farouq, on her official Twitter handle on Sunday, July 12, 2020.

READ MORE: COVID-19: Ekiti workers, top officials donate over N48.7million from salaries

The Minister in the tweet post said, ‘’My team and I continue to interface with stakeholders to ensure a successful transition for the N-Power programme. It has been 16 days since the portal opened and we have received 4.48 million applications to date.’’

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According to the ministry, the batch C of the N-Power National Social Investment Programme (NSIP), will only absorb 400,000 applicants at the end of the recruitment exercise.

READ ALSO: FG’s conditional cash transfer programme gets more beneficiaries despite criticism

Nairametrics had over 2 weeks ago, reported the opening of fresh online application portal for the batch C of the N-Power Programme. It was reported that those that applied before the due date and time set for opening of the portal, will have it declared null and void. They also said that all the processes involved in the application are free and as such, applicants do not have to pay anybody.

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It was also reported that upon the opening of the portal, the ministry received over 1 million applications across the country within a period of 48 hours. While playing down the initial fear of the portal being compromised, the ministry also assured that it was secured, with all data safe.

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Corporate Press Releases

Yomi Badejo-Okusanya, Ayeni Adekunle, Tomiwa Aladekomo, Others to speak at the Phyllion Tech Conference

The event will provide opportunities for stakeholders in technology to showcase future-driven solutions.

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Phyllion unveils its line-up of reputable speakers and tech leaders who will drive the conversation about the theme; Technology Transformation in Africa, What’s Next? The event is phased into three sessions; the general session, led by the Keynote speaker and female tech influencer as moderator; the Panel discussion, and will end with the start-up pitch session.

Leading this team of tech and communications thought leaders with the Keynote Address are Yomi Badejo-Okusanya (YBO) and Adrian Clews. YBO is a renowned Public Relations Veteran, Group Managing Director of CMC Connect (Perception Managers) and President, African Public Relations Association (APRA), with over 30 years of experience in the Marketing Communications industry, while Adrian Clews is Managing Director at Hinckley Associates Nigeria, leveraging on innovative solutions to help reduce business costs & improve security.

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Other reputable speakers are Tosin Faniro-Dada, who leads the Lagos Innovates Team at the Lagos State Employment Trust Fund (LSETF). She is responsible for developing and implementing programmes that provide an enabling environment for tech start-ups to thrive, and cultivating strategic partnerships to increase its reach in Lagos State.

Tomiwa Aladekomo, the Chief Executive Officer of Big Cabal Media, publisher of TechCabal and Zikoko, tech and youth publications. He is involved in building the next generation of African media brands and creating some of the most interesting original content from the continent.

Award-winning Media & Public Relations Consultant, Ayeni Adekunle, who is the Founder of the Black House Media Group (BHM), home to highly revered Public Relations Consultancy Company- BlackHouse Media, digital marketing and media company – ID Africa, and technology start-up – Plaqad.

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In addition are Emmanuel Asika, Covid-19 survivor and Channel Manager for Hewlett Packard (HP), Central Africa ; Funmilola Eniolorunda, the Chief Operations Officer at fast-growing software company, Venture Garden Group ; and Segun Iffie the Global Service Delivery Manager (Nigeria) at HPE .

Noteworthy on the panel is Temi Ophylia Ibekwe, Founder, Phyllion & Partners, who is a Strategic Communications Professional with nine years hands-on experience in Public Relations and Marketing, working with consumer brands, government institutions as well as small and medium enterprises (SMEs).

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Also the start-up pitch panel is packed with tech leaders such as, Managing Director, HP Central Africa, Ify Afe, CEO Edgebase Technologies, Joel Egbai, US-based Digital Business Transformation Strategist, Ogechi Chidebell and Mo Durosinmi-Etti, Program Manager at the Bulb Africa.

To host the event and moderate the sessions is a well-known female tech influencer, Tobi Ayeni, (Miss Techy).

Speaking on the conference, member of the panelist, Black House Media Group Founder, Ayeni Adekunle said, “I’ve always spoken about the importance of Nigerian companies embracing technology to transform not only their operations but the Nigerian landscape and I’m glad platforms like the Phyllion Tech PR Conference are championing the cause ensuring we set a lot of these theories in motion.”

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The event will not only help determine the direction of businesses post-COVID,  it would make prominent the impact of communication on tech businesses, and also reward tech-preneurs who have discovered innovative ways of solving problems in their milieu and society at large.

It is first of its kind within the sector and it provides opportunities for various stakeholders in technology to showcase future-driven solutions that will drive technology growth in the African continent.

The event is scheduled for  Friday, July 17, 2020 between 12:00pm and 2:30pm. The Phyllion Tech Conference presents a platform for communication to enable technology transformation in Africa through impact-driven conversations and actions.

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