Unilever net profit decreases 3.3%
Rampant smuggling of tea under the Afghan Transit Trade (ATT) has impacted the first half of 2010 earnings.
KARACHI:
Unilever Pakistan Limited, the country’s largest Fast Moving Consumer Goods (FMCG) company, announced a decrease of 3.3 per cent in net profit to Rs1.19 billion as tea sales dropped with a rise in its smuggling.
Rampant smuggling of tea under the Afghan Transit Trade (ATT) has impacted the first half of 2010 earnings, the company said in a notice sent to the Karachi Stock Exchange on Thursday.
However, the company’s earnings excluding tea rose 12.1 per cent. Unilever is the maker of Lipton and Brooke Bond, two of the biggest tea brands in the country.
Alongside the result, a Rs89 cash dividend per Rs50 share has been announced by the board of directors of Unilever Pakistan.
In addition to smuggling of tea, increasing input costs and depreciation of rupee impacted gross margins, which have fallen 4 percentage points.
However, impact on the bottom line was cushioned by the cut in overhead expenses, financial costs and sale of additional volumes.
Financial cost of the company has dropped significantly by 70 per cent to Rs71 billion during January to June from last year’s Rs241 billion.
Sales of the company on the other hand rose 20 per cent to Rs21.5 billion in the period under review against Rs17.9 billion recorded last year.
Its products Sunsilk and Lifebuoy recorded double-digit growth. Ice cream sales volume grew 29.9 per cent. Ice cream profitability improved as a result of better cost absorption.
Earnings per share of the company decreased to Rs89.3 compared with last year’s Rs92.27.
Tea smuggling issue
More than half of the tea consumed in the country is smuggled under the Afghan Transit Trade. Pakistan imports millions of kilogrammes of tea every year under ATT for Afghanistan. This high quality black tea first goes to Afghan markets and then is smuggled back into Pakistan. Afghanistan, a country of 25 million, imports more tea than Pakistan, a country having population of 175 million. The government loses more than Rs8 billion in taxes every year, the company said.
Published in The Express Tribune, August 20th, 2010.
Unilever Pakistan Limited, the country’s largest Fast Moving Consumer Goods (FMCG) company, announced a decrease of 3.3 per cent in net profit to Rs1.19 billion as tea sales dropped with a rise in its smuggling.
Rampant smuggling of tea under the Afghan Transit Trade (ATT) has impacted the first half of 2010 earnings, the company said in a notice sent to the Karachi Stock Exchange on Thursday.
However, the company’s earnings excluding tea rose 12.1 per cent. Unilever is the maker of Lipton and Brooke Bond, two of the biggest tea brands in the country.
Alongside the result, a Rs89 cash dividend per Rs50 share has been announced by the board of directors of Unilever Pakistan.
In addition to smuggling of tea, increasing input costs and depreciation of rupee impacted gross margins, which have fallen 4 percentage points.
However, impact on the bottom line was cushioned by the cut in overhead expenses, financial costs and sale of additional volumes.
Financial cost of the company has dropped significantly by 70 per cent to Rs71 billion during January to June from last year’s Rs241 billion.
Sales of the company on the other hand rose 20 per cent to Rs21.5 billion in the period under review against Rs17.9 billion recorded last year.
Its products Sunsilk and Lifebuoy recorded double-digit growth. Ice cream sales volume grew 29.9 per cent. Ice cream profitability improved as a result of better cost absorption.
Earnings per share of the company decreased to Rs89.3 compared with last year’s Rs92.27.
Tea smuggling issue
More than half of the tea consumed in the country is smuggled under the Afghan Transit Trade. Pakistan imports millions of kilogrammes of tea every year under ATT for Afghanistan. This high quality black tea first goes to Afghan markets and then is smuggled back into Pakistan. Afghanistan, a country of 25 million, imports more tea than Pakistan, a country having population of 175 million. The government loses more than Rs8 billion in taxes every year, the company said.
Published in The Express Tribune, August 20th, 2010.