Despite challenging environment, Unilever Pakistan Limited has registered a robust growth of 17 percent in its sales to Rs 44.671 billion in the year 2010 as compared to Rs 38.188 billion in 2009. "On top of factors like floods, low GDP growth, double digit inflation, deteriorating security environment and debilitating power cuts, which impacted businesses in Pakistan in 2010, Unilever Pakistan also suffered due rampant smuggling of tea," the company said.
The turnover was fuelled by strong volume gains in home and personal care, ice cream and spreads, it said adding that innovation, effective communication, bold market place activities and increased advertising contributed to impressive double digit growth.
The company in its financial results sent to Karachi Stock Exchange (KSE) said that the growth in the tea business which represents 29.7 of the company's sales was affected by smuggling, as only half the 180,000 tons of tea consumed in Pakistan is officially imported. More alarmingly, the incentive to smuggle is growing with the sharp increase in raw tea prices in international market.
"Along with the Pakistan Tea Association, we have proposed to the government to reduce the combined impact of import duty and sales tax to bring smuggled tea into the official net," the company said adding this will result in lower prices for consumers for whom tea is the drink of choice, assure the government of its current tax revenue, promote transparency and create level playing field for legitimate operators.
Improved controls over the movement of tea in transit to Afghanistan would help the matter to an extent, but is not its self sufficient to curb smuggling, the company said adding without reduction in taxes and therefore the incentive to evade, tea will be smuggled into Pakistan through the Iran/Afghanistan route.
The company said that home and personal care continues to deliver robust double digit sales growth on the back of strong volume and share gains in key categories - laundry, hair care and skin care. Fuelling this are bigger, better and faster innovations and more focused advertising. Despite frequent power outages the ice cream business, fuelled by strong innovation, achieved 33 percent growth, virtually all from the volume. The spreads business achieved double digit volume-led growth as a result of improved visibility, penetration, trial and promotional campaigns.
Rising input costs, which were not entirely passed onto consumers, coupled with strategic investment behind brands, impacted Gross and Operational Margins by 229bps and 181bps respectively. Strong volume and value growth resulted in 7.1 percent higher profit after tax and earning per share.
According to the financial results, the company's profit after tax increased to Rs 3.273 billion in 2010 against Rs 3.056 billion. The company's earning per share increased to Rs 246 in the period under review against Rs 230 in the same period a year back.
In its meeting held here on Monday, the board of directors of the company recommended final cash dividend of Rs 157 per ordinary share ie 314 percent. With the interim dividend of Rs 89 per ordinary share already paid during the year, the total dividend for the year 2010 amounts to Rs 246 per ordinary share of Rs 50 each. Total profit distributed by way to dividend amounts to 99.9 percent. The final dividend will be payable to the members on the number of ordinary shares held by them the close of business on March 29, 2011.