UNILEVER Pakistan Foods notched healthy growths in sales and gross margins for the nine months ended September 30, despite facing intense competition from other consumer goods giants.
According to the company’s latest filing with the Karachi Stock Exchange, overall sales went up 19 per cent to Rs5.26 billion in the nine-month period (9MCY13), from Rs4.42 billion in 9MCY12. Cost of goods sold registered an increase of 13 per cent YoY to reach Rs3.04 billion.
As a result, the company’s gross profit went up by a healthy 28.3 per cent to Rs2.22 billion. Gross margin came in at an impressive 42.2 per cent, up from 39.14 per cent in the same period last year.
Unilever Pakistan Foods’ after-tax profit for the period under review clocked in at Rs744.3 million, up 36 per cent from Rs547.5 million. This translated into earnings-per-share (eps) of Rs120.88, up from last year’s corresponding eps of Rs88.91.
The company announced a second interim cash dividend of Rs44.7 per share for the quarter ended September 30, taking the quarterly payout to Rs275.25 million. This was in addition to a dividend of Rs76 the company had declared for the half-year ended June 30 (amounting to a payout of around Rs468 million).
Meanwhile, the food giant recorded a 20 per cent growth in distribution, operating and other expenses, which cumulatively clocked in at Rs1.15 billion, from Rs958 million in 9MCY12. Regardless, the food giant’s operating profit went up from Rs829.6 million to Rs1.11 billion in the comparative period.
And perhaps unsurprisingly, given the increase in its profits, royalties sent by Unilever Pakistan Foods to its holding company increased by around 42 per cent YoY to reach over Rs51 million.
The multinational giant also did not seemingly hold back when it came to compensating its employees, as ‘salaries and other short-term employee benefits’ for ‘key management personnel’ registered a massive 163 per cent increase to reach Rs4.86 million by end-September 2013, over the same period last year.
Meanwhile, the food company also did a good job in controlling its total borrowings. Its ‘short-term borrowings’ had a zero-balance for 9MCY13, from around Rs65 million in the same period last year.
This, coupled with lower interest rates during the period, is likely to have contributed to the company recording a big 51.3 per cent YoY reduction in finance costs, which clocked in at Rs1.78 million for the nine-month period.
However, Unilever Pakistan Foods also seemed to have felt the pinch of higher taxes during the period. The company paid Rs361.2 million in taxes in 9MCY13, up 34 per cent per cent from Rs269.3 million in 9MCY12.
In terms of the challenges it faces, the firm has been consistently mentioning inflation, rupee depreciation, power outages and market closures due to uncertain law and order situation in its periodic financial reports.
And given the fact that it finds itself aggressively competing with other major players in the fast moving consumer goods segment, some analysts say Unilever Pakistan Foods would be hard pressed to keep its costs down in the short-to medium-term.
Third quarter result: Unilever Pakistan Foods posted a profit-after-tax of Rs275.3 million for the third quarter of calendar year 2013 (3QCY13), up a big 88 per cent from Rs146.3 million in the same quarter last year. This translated into eps of Rs44.7 per share, up from Rs23.76 per share.
For the quarter, the food giant recorded an operating profit of Rs419.4 million, up a big 92.6 per cent from Rs217.8 million in 3QCY12. This was despite the fact that Unilever Pakistan Foods’ other operating expenses almost doubled in the quarter to Rs31.4 million, from last year’s Rs16.3 million.
Company profile: Unilever Pakistan Foods Ltd. is one of two affiliated companies of the Unilever group that are operating in the country; the other is Unilever Pakistan Ltd. Unilever made its debut in the country in 1948.
Prior to April 2007, Unilever Pakistan Foods had been known as Rafhan Best Foods Ltd., which had been an affiliate of the US food giant Best Foods Ltd. before Unilever acquired Best Foods in 2000.
According to its annual report for 2012, Ms Conopco Inc. USA, a wholly owned subsidiary of Unilever N.V., held 75.85 per cent shares of Unilever Pakistan Foods Ltd, as at end-December 2012.