April 27, 2022 (MLN): Unilever Pakistan Foods Limited (PSX: UPFL) has posted a 25.69% YoY increase in net profits to Rs1.82bn for 1QCY22, compared to the profits of Rs1.45bn in the corresponding period last year.

This has translated into earnings per share which increased to Rs287.04 against Rs228.36 reported in the same period last year driven by growth, margin improvement, and tax credits pertaining to capital expenditure.

As per the financial statements, the directors recommended a first interim cash dividend of Rs287 – i.e. (2870%) per ordinary share of Rs.101- each (three months ended March 2021 Rs. 228.36 i.e. 2283.6% per ordinary share of Rs. 10/- each).

During the period under review, the company’s sales grew by 30% on the back of strong fundamentals i.e superior product, brand equity, wider reach, and effective spending on advertisement and promotion.

The growth was broad-based with both retail business and Food Solutions delivering strong results as a result of easing lockdowns.

The gross margin has dropped by 159 bps to 44.1% versus the same period last year majorly led by commodity inflation & FX devaluation.

Meanwhile, the finance cost has surged by 5.4x YoY from Rs4.9mn to Rs27mn due to higher borrowing cost. Moreover, the company booked an effective tax rate of 3.65% for 1QCY22, compared to 4.67% realized in the same period last year.

Pakistan's economic situation remained volatile due to sustained double-digit inflation and depleting foreign currency reserves. Moreover, the latest political developments in the country have added to the uncertainty. However, the management remains committed to navigating the challenges by leveraging the power of the brands and the company’s global and local expertise, the company said in its statement.

The management will continue its efforts on providing value to the consumers through new pack price architecture and driving cost transformation to ensure efficiencies within the value chain, it added.

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