Unilever Pakistan

Unilever Pakistan made a strong entry into the current calendar year. Capitalizing on rising farm incomes, the company increased its penetration in the rural areas, boosting its sales by 19 percent over the same period last year.
Aggressive sales efforts behind the firms spread business including door-to-door sales and a new marketing campaign delivered 37 percent growth in its sales. Robust growth of 23 percent was also recorded in the home and personal care products category, spurred by the enduring popularity of Surf, Fair & Lovely, Rin and Lux.
The ice cream business also witnessed sales growth of 18 percent on the back of enhanced product offering and lowering of product prices. Demand for Unilevers frozen desserts has continued to climb despite increased competition brought on by the national launch of Engro Foods Omore ice cream.
But the companys beverages business continues to blemish an otherwise expanding top-line. The smuggling of tea into the country under the guise of Afghan Transit Trade has dented the growth in demand for both of Unilevers tea brands: Brooke Bond and Lipton.
"We continue to lobby for lower import duty and sales tax, in order to remove the incentive to smuggle (tea)" said company secretary Amar Naseer in the notice given to the bourse on Friday.
It appears that aside from working on increasing sales, the company has also been making efforts to make more efficient use of its resources, thus improving margins. Gross margins stood at 33 percent in the outgoing quarter, compared to 31 percent over the same period in FY10.
Rising commodity prices have continued to drive up the cost of sales but timely changes in the retail prices of products have allowed the passing-on of this impact to consumers without a noticeable suppression of demand.
Resultantly, companys net earnings surged by 54 percent to Rs899 million in 1QFY11 from Rs582 million in the year-ago period.

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Unilever Pakistan P&L

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(Rs mn)                    1QCY11      1QCY10         Chg

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Sales                      12,170      10,255         19%

Cost of Sales               8,122       7,088         15%

Gross Profit                4,048       3,167         28%

Gross Margin                   33%         31%          -

Distribution costs          2,322       1,945         19%

Operating profit            1,370         942         45%

Operating margin               11%          9%         2%

Profit after taxation         899         582         54%

Net margin                      7%          6%          -

EPS (Rs)                     67.6       43.77

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Source: KSE notice

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