UNILEVER NIGERIA PLC: HARVEST OF PRESSURES.

Financial year 2015 is most certainly going to be a year of harvest of pressures for Unilever Nigeria PLC if the trend established by September holds through the third quarter.
According to the figures released for the period recently, pressure on bottom line came from drop in turnover, cost increase or less than proportionate decrease, and above all, from more than doubled finance charges amidst still weak liquidity position.
Within the nine months, Unilever Nigeria recorded 2.14% decline in turnover from N43632.1m to N42699.1m.
This was accompanied by 3.95% increase in cost of sale to N27835.4m from N26873.8m. Then distribution and other costs decreased by 4.2% to N12569.7m. This was positive since it was a higher drop than the turnover one but certainly not enough to turn the tide.
The back breaker, of course, turned out to be 100.4% growth in finance charges recorded to N2393.4m from N1194.3m.
This was cushioned a little bit by the increase in finance income from  N97.5m to N224.1m.
Thus, the company's profit before tax fell by 92.1% to N201.4m compared to N2546.4m previously. This worked out to be N4.71 gain on each N100 income as against N5.84 in September 2014.
SO:
* Unilever Nigeria needs to perfect its credit control because the bulk of the 86.7% increase in costly overdraft went into growing receivables by 10.9%; and reducing less costly borrowings by 31.5% at a time inventories dropped by 24.2% and working capital went down18.6% more in deficit.

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