Unilever Nigeria Sheds 10% as Investors Sell Down Consumer Stock
Fast moving consumer goods company, Unilever Nigeria Plc, lost 10% of its market value due to selloffs, details from trading activities revealed. The consumer goods company had seen successive price uptick that lifted its market value in the local bourse following solid earnings performance.
On Friday, its share price settled at N26.65 on the Nigerian Exchange trading platform, down from N29.60 at the beginning of the week. The negative sentiment dragged Unilever Nigeria Plc market value lower to N153.104 billion on Friday.
In nine months of financial year 2024, the company’s profit increased by more than 559% year on year to N11 billion. Its surprise earnings growth attracted investors, and boosted buying momentum that helped NGX consumer index to tick up.
Most of the investment analysts have gone neutral on consumer goods stock due to weak macroeconomic conditions that has tempered household demand.
The sector is also facing costs pressure due to sustained rise in headline inflation, and fluctuation in exchange rate, Unilever Nigeria earnings jumped in 9M-2024 was attributed elimination of losses from discontinued operations and reduction in tax expenses compared to 9M 2023
In the period, the company saw about 46% year-on-year growth in revenue, which printed at N103.848 billion from N71.206 billion in the comparable period.
Its cost of sales climbed but at a slower pace to revenue, according to analysts, Cost of sales rose by 25.8% year on year to N60.96 billion from N48.45 billion in the comparable period in 2023.
“This growth was moderated by revaluation gains of circa N4.73 billion on the company’s foreign currency-denominated balances.
As a result, the cost-to-sales ratio improved to 58.7% in 9M 2024, from 68.0% in the previous year,” CSL Stockbrokers said in a review. Net finance costs amounted to N3.8 billion in 9M 2024, representing a 40% increase compared to N2.7 billion in 9M 2023.
These costs were primarily due to interest on third-party bank loans, indicating relatively stable financing arrangements. The company momentum was driven by robust food product sales and strategic operational shifts, analysts at PAC Capital Limited said. #Unilever Nigeria Sheds 10% as Investors Sell Down Consumer Stock#
