Event

In Q3 2023, Unilever Nigeria (‘the Group’) revenue ascended by 31% to N27.37 billion (Q3 2022: N20.96 billion). This performance was underpinned by both the Food products and the Home & Personal Care products segment, which recorded a 40% and 20% revenue growth, respectively.

The Group reported a profit before tax of N389.30 million in Q3 2023 from a loss before tax of N2.51 billion in Q3 2022. Nevertheless, the Group remined in a net loss position due to a 690% surge in income tax. Although, the Group’s net loss improved by 52% to settle at N1.09 billion in Q3 2023 (Q3 2022: N2.26 billion).

Cessation of Sales

The Group, having previously announced its intention to exit the Home Care and Skin Cleaning categories, indicated in its Q3 2023 financial disclosure that the production for Home Care category ended in June 2023, and sales ceased in September 2023.

Outlook

In its Q3 2023 financial report, the Group indicated that the production and sale products within its Skin Cleansing category would continue only until December 2023, following the discontinuation of its Homecare category in Q3 2023. These developments are expected to affect the Home & Personal Care products segment’s contribution to total revenue. However, such strategic actions will mitigate the Group’s exposure to currency devaluation and allow for a more focused allocation of resources as it refines its operational efficiency.

Due to our expectation of operational efficiency, we have revised our fair value upward to N15.12 (previous: N14.31). However, our recommendation for the stock is now a SELL.  At the current price of N18.15, we believe the stock is currently overvalued.

Please follow the link “Unilever Nigeria Plc Q3 2023 – High Costs Eclipse Revenue Growth” to view the whole report.

Thank you.