Unilever Nigeria Loses Profit on High Energy Cost, Exchange Losses - InsideBusiness - Business News in Nigeria
The interim financial report of the food and personal care products company for the half-year ended June 2026 reveals the adverse impact of increased energy costs on the company’s operations. The energy. . .
The interim financial report of the food and personal care products company for the half-year ended June 2026 reveals the adverse impact of increased energy costs on the company’s operations. The energy cost-driven selling and distribution expenses more than doubled year-on-year in the second quarter to 125 per cent, to N2. 90 billion. The proportion of gross profit devoted to selling and distribution expenses nearly doubled from 5. 5 per cent to 10. 3 per cent over the period. While finance income failed to grow in the second quarter, the half-year position shows that net foreign exchange losses drove finance expenses up 3. 5 times year-on-year to N1. 7 billion. Foreign exchange losses on bank balances accounted for more than N1. 3 billion or about 78 per cent of the finance expenses for the period, as shown by the company’s records. Though finance income failed to grow in the second quarter, it remained strong at over N3 billion, with the net finance income position flat at almost N2. 9 billion in the second quarter. Pre-tax profit for the second quarter grew from N13. 4 billion to N15. 8 billion over the period. Still, a major rise in income tax expense from N4. 5 billion to over N7 billion claimed more than all the gains, resulting in the decline of profit for the second quarter. Unilever Nigeria retains the strength of improving sales, which was reinforced by slight moderation of production cost in the second quarter to push gross profit up by nearly N5 billion to over N28 billion for the quarter. The company’s half-year position shows sales revenue in the region of N120 billion, marking a year-on-year increase of 22 per cent. This is a slowdown from turnover growth of 43 per cent in the previous financial year. Moderated input cost equally remains a big advantage for Unilever, and this is happening for it for the third-year running. Cost of sales grew by 16. 4 per cent year-on-year to N65 billion at half-year against the 22 per cent growth in sales. Production cost continues to trim its share of sales revenue from about 67 per cent in 2023 to 63 per cent in 2024 and from 58 per cent in 2025 to 54 percent by half-year 2026. Related PostsThe cost saving powered the increase in gross profit for the half-year, well above the increase in sales at 30 per cent year-on-year to N54. 7 billion. Selling and distribution expenses grew far above revenue at 59 per cent year-on-year to N4. 8 billion, but the encroachment on earnings was moderated by a less rapid increase in marketing and administrative costs as well as three times jump in other income to N490 million at half-year. Operating profit grew strongly at 29. 5 per cent to N24. 4 billion at the end of June 2026, which was boosted by strong finance income of N6. 5 billion for the half-year. Two major cost increases made a difference between the strong growth in operating profit and a much slower improvement in the bottom line. The first is the exchange loss-led finance expenses that jumped three and a half times to N1. 7 billion, and the other is income tax expense that rose by over 39 per cent to close at N13. 6 billion for the half-year. The cost increases lowered net profit margin from 14. 7 per cent in the same period last year to 13 percent at the close of half-year operations in June 2026. Net profit for the period improved by 8 per cent year-on-year to N15. 60 billion for Unilever Nigeria at half-year. The company has seen two years of profit acceleration from N8. 4 billion in 2023 to N15 billion in 2024 and further to N32 billion in 2025. The 2026 financial year, however, looks very much like one of a slowdown. The company closed the period with earnings per share of N2. 72, up from N2. 51 per share in the same period in 2025. The directors have announced an interim cash dividend of N2 per share to shareholders. Post Views:42