Unilever declares Rs143 dividend despite 46% YoY profit drop

April 26, 2024 (MLN): Unilever Pakistan Foods Limited (PSX: UPFL) witnessed a 45.74% YoY profit decline during the quarter ended March 31, 2024, recording a profit of Rs1.82 billion [EPS: Rs285.87], compared to Rs3.36bn [EPS: Rs526.89] in the same quarter last year (SPLY).

In view of the financial results, the Directors have recommended a first interim cash dividend of Rs143 per ordinary share.

This will be payable to the members on the number of ordinary shares held by them at the close of business on May 6, 2024

Going by the results, the company's top line dropped by 17.9% YoY to Rs8.76bn as strong inflationary pressures led consumers to scale back on purchases of non-essential commodities like instant noodles in favor of essential supplies.

As sales decreased by a greater proportion compared to the cost to sell, the gross profit worsened by 30.6% YoY to Rs3.4bn in the first quarter of 2024.

Addressing the double-digit inflation by passing on value to consumers through pricing adjustments, Unilever landed at a gross margin of 38.9%.

On the expense side, the company's Distribution, Admin & Other expenses dropped by 20.29% YoY to Rs1.48bn during the review quarter.

Unilever's other income soared by 26.7% YoY to stand at Rs656.09m in 1Q2024 as compared to Rs517.8m in SPLY.

Furthermore, the company reported a net finance inflow of Rs4.53m against a net finance cost of Rs94.79m recorded in 1QCY23.

On the tax front, the company paid a higher tax worth Rs764.52m against the Rs117.16m paid in the corresponding period of last year, depicting a massive jump on a YoY basis.

Earnings per Share (EPS) dropped by 45.7% compared to the same period, led by dilution of gross margin and maturity of investment tax credits, as per the company

Future Outlook

After a contraction in 2023, macro indicators are queuing towards economic stability. Stabilization of FX reserves through the revival of the IMF program has eased supply constraints and input cost volatility, driving increased operational momentum.

Nevertheless, high headline inflation persists, on an already elevated base, thereby compelling consumers to make conscious consumption. As a result, Unilever anticipates a gradual recovery of demand for our non-discretionary portfolio.

"Our management team aims at capitalizing our brand's strength, introducing exciting innovations and enhancing cost efficiencies across the value chain to create shareholder value," it added.

Amount in thousand except for EPS

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