Unilever Pakistan Foods Limited reports impressive 54% YoY increase in net profits in CY22

February 27, 2023 (MLN): Unilever Pakistan Foods Limited (PSX: UPFL) has shown significant progress during CY22 as its net profits stood at Rs7.95 billion, registering an increase of 54% YoY [EPS: Rs1,248.41] on account of broad-based growth with both retail business and food solutions, the company filing on PSX showed today.

Pursuant to the financial statement provided to PSX, the company’s sales grew by 43% YoY on the back of strong fundamentals i.e., brand equity, wider reach, and effective spending on advertisement and promotion.

However, the cost of sales posted a proportionately higher increase which resulted in a 2.77% YoY decline in gross margins to 42.21% in CY22.

In addition to it, the finance cost has also jumped by 76.76% YoY to Rs54mn due to higher borrowing costs.

Moreover, the company’s effective tax rate increased from 4.67% to 4.94% in the said period.

Pakistan's economic and operating environment is expected to remain challenging, as the country continues to grapple with the dwindling FX reserves, the statement added.

While efforts are being made to stabilize the situation through the revival of the IMF program, followed by multilateral flows, the requirement for FX reserves for 2023 and beyond remains significantly high and therefore, the FX reserves of the country are expected to remain under pressure, unless major debt restructuring is undertaken.

Moreover, measures to bridge fiscal gaps as a pre-requisite of the revival of the IMF program may lead to further inflation.

The ever-rising inflationary pressure is significantly affecting the purchasing power of consumers forcing them to make sharper choices by downtrading and downgrading.

Businesses may face supply disruptions as the government is expected to manage imports to stabilize reserves in the best interest of the country.

“In light of the above, the company expects to face some headwinds on both the demand and supply sides. However, the management remains committed to navigating the situation by building resilience across the value chain and leveraging global expertise,” it noted.

“We will continue our efforts to stay relevant to the consumer by delivering value through a sound understanding of their needs, innovations, and new pack price architecture while managing profitability through a combination of optimum pricing and cost transformation initiatives,” the statement read.

Copyright Mettis Link News