The passing year brought along tough operating conditions as economic growth stayed sluggish due to poor security environment, high commodity costs and devastating floods. Despite these adversities, Unilever Pakistan remained resilient and managed to raise its sales by 16 percent in the CY11. The growth is owed to new product/brand launches, competitive pricing and successful campaigns. Seven new brands were launched in CY11; this is the highest ever in a single year. Last years sales trend followed in CY11, as sales remained depressed in the first quarter and highest sales were registered in 3rd quarter. The home and personal care segment showed double digit growth, the Company attributes this growth to strong media campaigns like Time to shine -Rin and Fairness meter -Fair and Lovely. Further contributing to the increase was the successful launch of six new brands. Despite stiff competition from the illegally smuggled tea, the beverages segment of Unilever that is mainly comprised of tea brands managed to beat last years sales. This is mainly backed by price increase due to high material cost and high brand equity of Lipton. The ice-cream segment which has experienced an average growth rate of 22 percent in last 4 years, managed to grow by 11 percent in CY11. The decline in average growth is owed to load shedding and launch of Omore in Karachi (one of the main markets for Companys ice-cream segment). Despite rising input costs, timely price corrections and better product mix enabled the Company to improve its margins. A Company official while talking to BR Research said that "better margins are owed to the new products launched in CY11, as most of them are high yield products; in addition margins of tea business also improved as tea prices were less volatile in CY11". He further said that "the pricing action taken in the ice-cream segment, which hardly made any profit last year, contributed to the improved margins." The launch of 7 new brands spiked the marketing expenditure; this increase is reflected in the higher distribution costs. Combined, the marketing expenses and increase in restructuring costs (mainly consisting early retirement expenses, and lay-offs) slightly restrained the operating margins; however, they were still higher than CY10. The large population and increasing awareness promises great future for the Company. However, the Company believes that the loose stance of government on curbing smuggling, power shortages, and poor security situation would continue to threaten it in the short run.
=============================================== UNILEVER PAKISTAN LIMITED =============================================== (Rs mn) CY11 CY10 chg =============================================== Sales 51876 44671 16% COGS 33792 30094 12% Gross profit 18084 14577 24% Gross margin 35% 33% 7% Profit from operation 6150 4970 24% Operating margin 12% 11% 7% Profit after tax 4094 3273 25% Net margin 8% 7% 8% EPS (Rs) 308 246 25% ----------------------------------------------- Source: KSE notice ===============================================
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