Analysis: About Unilever’s Plan To Sell Its “Spreads” Business
Nairametrics| Unilever Group, the parent company of Unilever Nigeria Plc, announced that it will be divesting from its spreads business. The company also revealed plans of a massive restructuring that includes taking up more debt and increasing its portfolio of acquisitions. The spreads business refers to sale of its margarine and butter businesses.
The announcement was made public in Nigeria through a press release published on the website of the Nigerian Stock Exchange. For more stringent stock exchanges around the world, this announcement was made public on the 6th of April 2017.
In the press release, Unilever explains that it is exiting the spreads business because its future lies outside the group as it plans consolidating its food and refreshment business. Reports suggest the company is also reeling from its failure to acquire fellow food giant Kraft Heinz. In 2014, Unilever separated its Spreads business as a standalone. The business it appears, has steadily dipped in revenues even as it makes up about 7% of the group’s revenues.
How it affects Unilever Nigeria
- Unilever Nigeria’s Spreads business includes Blue Band Margarine
- Blue Band has been sold in Nigeria since 1955
- Its spreads business is currently included in its Foods products business
- The foods products business posted revenues of N36.3b, about 52% of the N69.7 billion revenues posted in 2016. Food Products was N29.9 billion in revenues in 2015 and 50% of revenues
- Unilever Nigeria posted just N3 billion in profits in 2016 about 150% higher than what was reported in 2015.
- The company has also revealed plans to raise capital via a rights issue
- They did not confirm if the spin off of its spreads business will affect Blueband and even if it does, if they will sell it locally or part of the global deal.
- Blue Band is an intentional brand and is not only sold in Nigeria