– As Stakeholders Bemoan Gloomy Outlook
BEVERLY HILLS, January 24, (THEWILL) – Unilever Nigeria Plc, a leading consumer goods company, recorded N1.59 billion post-tax loss in 2020, representing 62.3 per cent lower than the N4.22 billion reported in the preceding year 2019.
The company made this disclosure in its unaudited annual financial report submitted to the Nigerian Stock Exchange (NSE) Friday.
Although revenue increased to N61.57 billion, up by 1.34 billion (Y-o-Y) as against 60.75 billion in 2019, the company recorded N1.95 billion loss before tax against N8.63 billion in the preceding year.
Additionally, despite significant drops in distribution, marketing and administrative expenses, the company’s profit was severely impacted by the border closure, Covid-19 lockdown and the #EndSARS protest, leading to N1.59 billion post-tax loss.
Specifically, impairment loss on trade receivables completely eroded the company’s gross profit of N13.78 billion to the tune of an operating loss of N3.05 billion.
Impairment loss is a recognized reduction in the carrying amount of an asset that is triggered by a decline in its fair value.
The report further revealed that Impairment loss on trade receivables increased to N1.08 billion, up by 49.73 per cent (Y-o-Y), from N721 million in 2019, while Cost of sales decreased to N47.79 billion representing 106.52 per cent (Y-o-Y).
Finance income decreased to N1.47 billion, down by 48.39 per cent (Y-o-Y) as Finance costs also dipped to N223.29 million, or 72.91 per cent (Y-o-Y).
Other Income rose to N66.99 million from N65.39 million representing 2.44 per cent (Y-o-Y) as operating loss decreased to N3.05 billion, down by 70.54 per cent (Y-o-Y) from N10.35 billion in 2019.
Doyen of the Nigerian Stockbrokers and Chief Dealer/COO, at Hedge Securities & Investment Co. Ltd, Mr Sam Ndata, expressed concern over the gloomy outlook of the economy occasioned by the Covid-19 pandemic and the 15-month border closure.
He said Unilever should put necessary measures in place to ensure it weathers the storm as the operating environment assumes a more challenging outlook.
Ndata told THEWILL by telephone that it requires innovation for companies to sail through the prevailing economic headwind.
National President, Trusted Shareholders Association of Nigeria, Mukhtar Mukhtar, described the development as “a good omen”.
“By reducing the loss from N4.22 to N1.59 billion, Unilever has demonstrated excellent corporate governance and sound management initiative to make investors optimistic about receiving dividend soon.
“Manufacturing requires the ability to turn things around; what has happened in the case of Unilever is a good omen, considering what these companies suffered during the lockdown and the border closure by the Nigerian government.
“Unilever has shown the ability to play an active role in the AfCFTA that has commenced across the continent by reducing its loss, no matter the amount, and that means the company is moving in the right direction.,” Mukhtar told THEWELL by telephone.
National Co-ordinator, Pragmatic Shareholders’ Association of Nigeria, Mrs. Bisi Bakare, urged Unilever and other companies to institute efficient, cost-reducing measures to enable the company to survive the difficult operating environment.
According to her, “directors and management should be ready to make the required sacrifice at this time as shareholders experience ‘dividend draught’ at this time,” Bakare told THEWILL in a telephone chat.
Unilever pledged to support the Nigerian government in curbing the impact of Covid-19 on the citizens and the general business environment while taking measures to protect the health of its workers and other stakeholders.
“COVID-19 is an evolving situation; the company is monitoring closely any material impact to the going concern of the business.
“Our priority is to protect the health, safety and welfare of our employees, customers, and partners, as well as support the Government and its agencies as they work to reduce the impact of the outbreak,” the company noted.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
