Unilever declares Rs623 dividend as profit grows in Q2CY24

August 16, 2024 (MLN): Unilever Pakistan Foods Limited (PSX: UPFL) profit rose 8.23% to Rs1.98 billion [EPS: Rs311.46] in Q2 CY24 compared to a profit of Rs1.83bn [EPS: Rs287.78] in the same period last year (SPLY).

Considering the improved financial performance, the company's directors have recommended the final cash dividend of Rs623 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 August 26, 2024.

Going by the results, the company's top line grew by 2.1% YoY to Rs8.24bn as compared to Rs8.07bn in SPLY.

However, the gross profit of the company worsened to Rs3.22bn in Q2 2024 as the cost of sales rose by a greater proportion.

Accordingly, the gross margins worsened to 39% as compared to 41.6% in SPLY.

On the expense side, the company's distribution, admin & others fell 29.8% YoY to Rs1.35bn, while and taxation-final rose 29.8% YoY to Rs48.65m.

In addition to the drop in expense, the company other income supported the profit rise, up by 39.5% YoY to stand at Rs923.67m in Q2 2024.

The company’s finance cost clocked in at Rs10.34m, against the net finance income worth Rs26.23m reported in Q2 CY23.

On the tax front, the company paid a higher tax worth Rs745.39m against the Rs265.66m paid in the corresponding period of last year, depicting a rise of 180.6% YoY.

On a 6-month basis, Unilever's profit dropped significantly by 26.68% to stand at Rs3.8bn.

Sustained inflationary pressure with double digital inflation over the last two years on the back of steep increases in administered prices (electricity tariffs and petroleum) have directly impacted the purchasing power of the consumers, particularly the purchases of non-essential commodities like instant noodles, in favor of essential supplies.

This has led to a 9.3% decline in sales, the company said in view of its 6-month performance.

In response to the high inflationary pressures, strategic price adjustments helped it land at a gross margin of 38.9%.

EPS dropped by 26.7% compared to the same period, led by dilution of gross margin and maturity of investment tax credits.

Future Outlook

With the expected revival of the IMF program and related measures taken by the government, macroeconomic indicators show signs of relative stability.

The overall consumer sentiment is supported by the softening of inflation indicators.

However, the impact of budgetary measures to increase revenue generation may impact consumers' purchasing power further.

"As a result, we anticipate a gradual recovery of demand for our non-discretionary portfolio," the management added.

Amount in thousand except for EPS

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