Why Unilever Has Injected Over 160 Million Euros (€160m) Into Nigeria Since 2014
After investing as much as 150 million Euro ($194 million) across its Nigerian production lines in 2014, Unilever, one of the oldest conglomerates in Nigeria, has concluded plans to invest about 10 million euros (N4.3billion) in a new plant in the country, as part of its expansion in Africa’s largest economy.
This hint was dropped by the Unilever Executive President/CEO, Mr. Luc-Olivier Marquet during an interview with the MARKETING EDGE team at International Convention Centre (ICC), Durban, South Africa, venue of 2017 Loeries Creative Week.
The Unilever boss who delivered a powerful paper on ‘Creativity and the Role of Major Stakeholders in Building the Brand,’ charged the African Creative people to be more Afrocentric in telling the African story through their creativity.
The new plant is to involve the manufacturing of Blue Band, its flagship margarine brand, which is in high demands in the country. The move will also help the company to further deepen its presence.
Unilever’s expansion plan will make the brand maintain its leadership position in the market, meet growing margarine demands in the country and maintain its competitive edge amongst competitors like Blue Bonnet, Chiffon Margarine and others.
Market analysts believe Unilever’s expansion plans is one of the reasons for its subsidiary’s recent decision to approach the Nigerian Stock Exchange (NSE) to raise about N58.851billion fresh capital through Rights Issue. In the application, Unilever Nigeria will be issuing 1,961,709,167 ordinary shares of 50 kobo each at N30.00 per share to shareholders on the basis of 14 new shares for every ordinary shares held.
The Chairman of Unilever Nigeria, His Majesty Nnaemeka Achebe, the Obi of Onitsha had during its recent Annual General Meeting said the company’s performance showed its commitment to grant shareholders returns on their investments.
The conglomerate rolled out an impressive second quarter 2017 result showing a revenue growth of 58 per cent and a jump in net profit by a massive 3873 per cent Year-on-Year (YoY). Also, it’s quarter-on-quarter (QoQ) review showed a moderate growth rate in revenue at 3.4 per cent while net profit increased by 29.4 per cent. But both the revenue of N22.9 billion and net profit of N2.1 billion were ahead of most analysts’ estimates.
While its revenue continued to benefit from the increase in the prices of key products, recent results suggest that the company is increasing its market share.
There was particularly the recovery in the Personal Care division, wherein revenue growth was 53% in H1. Revenue in this category grew by 73% y/y and 1% q/q in Q2. Revenue in the Home Care division also grew by 77% y/y and 17% q/q, and while Food revenue declined by 2% q/q, it grew by 24% y/y during the review period,” they had stated. Another positive surprise from the second quarter result is the strong rebound in gross margin to 33.2 per cent, from 28.4 per cent in Q1’17, 27.9 per cent in Q2’16, and above analysts’ 28 per cent forecast.
Unilever is a Dutch-British transnational consumer goods company, co-headquartered in Rotterdam, Netherlands and London, United Kingdom. Its products are available in 190 countries.
Industry analysts linked the quick margin recovery in Nigeria to pricing actions, positive mix, and more importantly, exchange rate-linked cost savings. They reasoned this is why the conglomerate was ready to open more investment frontiers in the country.