Unilever Nigeria Plc lost about N3.726bn from the discontinuation of its home care and skin cleansing products including Omo washing powder, Key soap, Pears baby care goods, Vaseline petroleum jelly, and Lux soap.
In its recently released unaudited interim financial statements for the year ended December 31, 2023, Unilever revealed that the loss for the period under review was higher than the N1.492bn in 2022.
In March 2023, Unilever Nigeria announced it would be exiting the home care and skin cleansing markets to reposition its business for sustained profitability. Production and Sales for Home care and Skin cleansing business categories ceased in December 2023.
The statement it released back then said that it was changing its business model to accelerate the growth of the company and meet the needs of consumers, shareholders, and employees better.
Part of the statement read, “This will involve repurposing the portfolio by exiting the home care and skin cleansing categories to concentrate on higher growth opportunities.
“Strengthening business operations with measures to digitise and simplify processes; and focusing more on business continuity measures that reduce exposure to devaluation and currency liquidity in our business model.”
On the figures from the discontinued operations, Unilever said, “The numbers reported reflect the results of the Home Care and Skin Cleansing business categories from the beginning of 2023 to its discontinuation in September and December respectively. The comparative figures represent the full-year results of the business categories in 2022.”
In the period under review, Unilever recorded N16.484bn in turnover for the discontinued products which was overwhelmed by the cost of sales which stood at N17.044bn. Also, the firm disclosed that it had entered into a Finance Lease contract for its Plants and Machinery previously used in the Home Care and Skin Cleansing business categories with a third party. The lease term is for a period of 10 years.
Meanwhile, Unilever Nigeria Plc enjoyed royalties, and service fees holidays in 2023.
Based on the agreement, Unilever Nigeria Plc has exclusive rights to the know-how, manufacture, distribution and marketing of international brands namely: Omo, Sunlight, Close-Up, Pepsodent, Vaseline, Lux, Knorr, Royco, and Lifebuoy in Nigeria, given to it by Unilever Plc, United Kingdom is expected to pay a royalty of 2 per cent of net sales value and 0.5 per cent of net sales value for Technology and Trade Mark licences respectively.
“Also, Unilever Nigeria has a central support and management services agreement with Unilever Europe Business Centre B.V (previously Unilever Plc) for the provision of corporate strategic direction, and expert advice/support on legal, tax, finance, human resources and information technology matters. In consideration of this, a fee of 2 per cent of profit before tax is payable as service fees.
“Unilever Nigeria Plc enjoyed royalties and service fees holiday in 2023. N106m reported in 2023 is a true-up from 2022 royalty and service fees due.”
At the end of 2023, the company’s revenue rose to N97.437bn from N64.642bn in 2022. The company’s profit for the period rose significantly to N8.543bn from N4.467bn.
