The past six months have been quite eventful for Unilever Pakistan. The company announced its financial results for the first half of the current calendar year, on Tuesday but the numbers only tell half the tale of the companys performance over the recent past. Even though investors would be happy to pocket the interim cash dividend of Rs105 per share; the companys results failed to meet analysts expectations. The half-yearly net profit after taxation stood at Rs1.5 billion, compared to last years tally of Rs1.1 billion, for the same period. While this represents a growth of 29 percent in the bottom line since Jan-Jun 2010; the actual tally falls at Rs326 million or 18 percent below expectations. Notes attached to the results posted at local stock exchanges cited that both after-tax earnings and growth in turnover were constrained by a number of factors. "Smuggling of tea continued to affect volume and margin, power outages impacted distribution of ice cream, whilst pressure on disposable incomes slowed category growth" explained company secretary Amar Naseer. Costs have remained stable as have the companys margins, when compared against the same period last year as both distribution costs as well as administrative costs remained at about 20 percent and three percent of sales, respectively. Gross margins also improved to 34 percent for 1HCY11 compared to 32 percent during the comparable period in 2010. The company launched five new entries during the course of the past six months: Sunlight Washing Powder, Dove Shampoo, Dove Soap, Vim Dishwash Liquid and Bars. Moreover, the company turned aggressive on the marketing front with strong media campaigns for Surf, Rin, Lux, Fair and Lovely as well as Walls. Resultantly, the home and personal care business grew by 18 percent between January and June 2011. The companys tea business continues to suffer as a result of relatively high taxes on one hand and competition from smuggled tea on the other. However FBR has hinted that the industrys demands for lowering import duties on the beverage will be heeded. When this change materialises, Unilever can expect a sizeable increase in its sales volumes. The ice cream market is anything but cool for the fast-moving consumer goods manufacturer. The company has focussed on managing costs in the face of increased competition. Walls has also launched Fruittare, Peshawari Crunch and other variants over the relevant period. These efforts have culminated into an increase of 20 percent in the top line of the companys ice cream business.
================================================= Unilever Pakistan ================================================= Rs (mn) 1HCY11 1HCY10 chg ================================================= Sales 24803 21,504 15% Cost of Sales 16453 14,692 12% Gross Profit 8350 6,812 23% Distribution costs 5308 4,275 24% Admin expenses 724 581 25% Other operating income 190 110 73% Finance costs 47 71 -34% Profit after taxation 1532 1,187 29% ================================================= EPS (Rs) 115.2 89.3 29% =================================================
Source: KSE notice
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