Corporate results: Unilever posts Rs1.2b profit

Earnings up 5% year-on-year, fail to meet market expectations

KARACHI: On the back of notable growth in volumes, Unilever Pakistan Foods reported net earnings of Rs1.2 billion for the financial year ended December 30, 2015, according to a notice sent to the Pakistan Stock Exchange on Tuesday. It, however, failed to meet market expectations.

The Pakistan subsidiary of the Anglo-Dutch foods giant reported an after-tax profit of Rs1.22 billion or Rs220.09 per share for the year under review, up 5% compared to Rs1.17 billion or Rs190.29 per share it earned in 2014. Unilever Foods is not a liquid stock and, therefore, not covered by security analysts. However, the company’s share price hit its lower limit soon after the result announcement, which accompanied a final cash dividend of Rs96 per share.



The stock, which traded at Rs6,000 per share the previous day, depreciated by Rs300 or 5% to close at Rs5,700 per share meeting its lower cap on Tuesday with only 60 shares changing hands.

“The result was below market expectations,” Taurus Securities Head of Research Zeeshan Afzal said attributing the lower-than-expected earnings to a surge in the company’s admin and distribution expenses. The company’s distribution, admin and other operating expenses for the year under review increased to Rs2.23 billion, up 29% compared to Rs1.73 billion last year, eating up almost half a billion from its bottom line.

Their revenues increased significantly, which should have resulted in an increase in the profit if not for the surge in admin expenses which hit the bottom line hard, Afzal said. The company’s revenues clocked in at Rs8.6 billion in 2015, up 10% from Rs7.8 billion in the previous year.

Explaining, the analyst further said October-December quarter was a slow growth period for food sector, which was reflected by the results of almost every company. However, there was some impact of lower inflation and increased competition, which resulted in lower earnings for the company while profit taking put the stock under pressure.

Along with the result, the company also announced that Fariyha Subhani, Director and Chief Executive of the company, has stepped down from her position while Shazia Syed has been appointed as Chief Executive with immediate effect.

Published in The Express Tribune, March 9^th, 2016.

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