KARACHI, July 8: The Fortune magazine which released the list of Asia’s top 50 companies on Monday, wrote: “That there can be a pot of gold at the end of the process is indicated by the success of those that have already done so”. The magazine was referring to Unilever, which it said was “reaping the benefits of a restructuring programme it announced three years ago.” Unilever’s profit (in Asia) increased 22 per cent in 2002, even though revenue fell by 1 per cent. Fortune said: “Unilever made its supply chain more efficient consolidated manufacturing and is cutting the number of brands it sells from 1,600 to 400”.

The Board of Directors of Unilever Pakistan Limited (formerly named Lever Brothers Pakistan Limited) is scheduled to meet on July 24 to announce financial figures and appropriations for the first half of the year 2003.

The 50-rupee share in Unilever Pakistan is currently trading at Rs1,356 — the stock has climbed 16 per cent in the six months since January. Last year, the company had distributed cash dividend at 276 per cent, which included the interim of 116 per cent.

For all of the year 2002, Unilever Pakistan had posted net sales amounting to Rs21.4 billion, up from Rs20.0 billion the earlier year. Trading profit had increased 25.5 per cent to Rs6.7 billion, from Rs5.4 billion and the trading margin climbed to 31.4 per cent, from 26.8 per cent. All in all, the company had managed to earn record after tax profit of Rs1.75 billion for the year 2002. Analysts expect the growth pattern to continue for the country’s Fast Moving Consumer Goods (FMCG) giant, since consumer expenditure for FMCGs tend to remain steady during both, periods of recession and growth. And with 5 per cent GDP growth during financial year 2003, Pakistan has shown strong economic fundamentals. This together with improved consumer spending (driven by higher agricultural income and inflow of remittances from abroad) is expected to help FMCGs drive their profits further up. Kashif Artani, analyst at brokerage InvestCap forecasts Unilever to post after tax profit in the range of Rs925 to Rs950 million (earning per share: Rs70-72) for the half year (Jan-June 2003).

Analyst Muhammad Owais at Taurus Securities observed that in the first quarter (1Q03), sales at Unilever Pakistan had increased by 5 per cent but cost of goods sold had risen by only 2.6 per cent, mainly because of stable foreign exchange rate. The analyst stated that the company had very low debt and financial charges were negligible. Unilever was expected to payoff Rs825 million of its long-term loan by September 2003, leaving just about Rs200 million balance in long-term debt. The low interest rates and comfortable rating meant that the company would be able to avail trade finance at very low interest rates.

And InvestCap pointed to an interesting development. According to stories in the Indian press, Hindustan Lever (HLL) had abandoned the edible oil segment in India and Nepal as a restructuring exercise. HLL had sold its oils business, including Dalda, to a US based company for Indian Rs900-950 million. This segment had been fetching HLL an annual turnover of around Indian Rs4 billion. However, in striking the bargain, HLL had retained the distribution rights for which it would earn an annual fee of 2 per cent on sales. According to analysts, possibilities existed that the company could look to do something similar in Pakistan, given the depressed sales of its cooking oil. As per Unilever Pakistan’s 2002 annual report, last year (2002) was a challenging year for Dalda in Pakistan, with 12 per cent shrinkage in sales owing to consumers’ switching to low priced products. “Even though nothing is forthcoming as yet regarding divestiture of cooking oils business in Pakistan”, commented the analyst, “shareholders may view this as something positive owing to the Unilever management’s reputation for making sound economic decisions”.

Unilever Overseas Holding Limited, London is the largest shareholder, which last held 66.8 per cent of the 136 million shares in Unilever Pakistan.