Unilever Pakistan Foods’ profit-after-tax declines 27% to Rs3.8bn in H1CY24

Unilever Pakistan Foods Limited (UPFL), a subsidiary of Conopco Inc. USA, saw a significant decline of 27% in its profit-after-tax, which clocked in at Rs3.8 billion in the first six months of 2024.

The company, which manufactures and sells consumer and commercial food products, registered a profit of Rs5.19 billion in the same period of the previous year (SPLY), according to the company notice sent to the Pakistan Stock Exchange (PSX) on Friday.

“Sustained inflationary pressure with double digital inflation over the last two years on the back of steep increases in administered prices (electricity tariffs and petroleum) have directly impacted the purchasing power of the consumers, particularly the purchases of non-essential commodities like instant noodles, in favour of essential supplies. This has led to 9.3% decline in sales,” the notice said.

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The company’s sales declined to Rs17 billion in H1CY24 from Rs18.74 billion in the same period last year.

A significant increase in taxation also contributed in the profit’s decline.

The company’s profit-before-tax stood at Rs5.29 billion in the first half of 2024, marginally lower than Rs5.55 billion registered in SPLY.

The taxation amount in the said period increased to Rs1.48 billion, against Rs360 million in SPLY.

Its gross profit stood at Rs6.62 billion in the first six months of 2024, a decline of nearly 20%.

“In response to the high inflationary pressures, strategic price adjustments helped us land at a gross margin of 38.9%. Earning per share (EPS) dropped by 26.7% compared to the same period last year, led by dilution of gross margin and maturity of investment tax credits,” the notice added.

UPFL’s EPS stood at Rs597.33 in H1CY24, compared to Rs814.67 in SPLY.

On the other hand, Unilever’s other income rose to Rs1.58 billion in H1CY24, as compared to Rs1.18 billion in SPLY.

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However, for the quarter ended June 2024, the company registered a profit of Rs1.98 billion, against Rs1.83 billion in SPLY.

EPS in the quarter stood at Rs311.46 compared to Rs287.78 in SPLY.

“In view of the financial results for the three months ended on June 30, 2024, the Directors have recommended a second interim cash dividend of Rs623 - i.e (6230%) per ordinary share of Rs10/ each,” the company said, adding “this will be payable to the members on the number of ordinary shares held by them at the close of business on August 26, 2024”.

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UPFL manufactures and sells consumer and commercial food products under brand names Rafhan, Knorr, Energile, Glaxose-D and Food Solutions. The company is a subsidiary of Conopco Inc. USA, whereas its ultimate parent company is Unilever PLC United Kingdom.

Regarding the future outlook, the company, in the notice, anticipated a gradual recovery of demand for its non-discretionary portfolio.

“With the expected revival of IMF programme and related measures taken by the government, macroeconomic indicators show signs of relative stability. The overall consumer sentiment is supported by the softening of inflation indicators.

However, the impact of budgetary measures to increase revenue generation may impact consumers’ pruchasing power further,“ the company said.