Profit statements

Unilever returns to profit as MTN increases revenue by 45%

RThe results published for the 2021 financial year showed that if Unilever returned to profit, MTN Nigeria increased its revenue by 45%.

Analysis of the results of the two companies published this week on the Nigerian Stock Exchange (NGX) indicated that Unilever returned to profitability last year after posting a loss a year earlier.

The turnaround in the company’s fortunes follows a 35% rise in revenue to N70.52 billion from N52.2 billion the previous year, it said.

However, while revenue was up more than a third from the previous year’s level, cost of sales rose by a lower margin, rising 22.9% to N50.55 billion, against N41.14 billion.

Gross profit jumped about 80% to N19.92 billion from N11.07 billion the previous year. The real change, however, came in operating profit, which moved from a loss position of N5.86 billion in 2020 to a profit of N1.62 billion.

A look at the company’s financing activities reveals some of the reasons for the high costs it suffered in 2020. Its financial income for that year was N1.83 billion, but they have fell more than 50% to 679 million naira last year. On the other hand, the cost of financing amounted to 219.5 million naira in the year under review, compared to 350 million naira in the previous year.

The consequence of the above factors is that the net financial income fell in 2021 to 460.1 million, compared to 1.48 billion the previous year.

In the notes to the accounts, Unilever provides an overview of the causes of the high cost of financing it experienced in 2020. In that year, according to the company, interest charges on lease debt amounted to 84, 53 million naira, but they have more than halved. at N41.83m last year.

The company also indicated that its plans to divest from some of its activities were on track and would be concluded before the end of the current year.

“During the year, management embarked on a plan to sell part of its manufacturing facility in the Home and Personal Care segment. Accordingly, a portion of this facility is presented as owned assets. for sale at book value of N262 million.

“Efforts to sell the disposal group have reached an advanced stage and the sale is expected before December 31, 2022,” he said.

Unilever Nigeria also announced that it has completed the sale of its global tea business. In accordance with the Unilever group directive, the company has been engaged in a plan to sell this activity since its announcement on July 23, 2020.

The tea business was previously not classified as held for sale or a discontinued operation.

…while MTN profits increased by 45%

On the side of MTN Nigeria Communications Plc, its annual profit after tax increased by 45.5%.

Profit after tax rose to N298.65 billion from N205.21 billion in the 12 months to December 2021, it noted in a statement released at the close of business last Friday.

Services revenue for the period rose 23% to N1.65 billion from N1.35 billion a year earlier, the company said.

MTN has identified the main sources of revenue for its services as voice, data, SMS, interconnection and roaming, handsets and accessories, digital value-added services and others.

Of these, Voice led in revenue, with 819.74 billion naira in 2021, up from 766.39 billion naira the previous year. This was followed by the data, which brought in 516.21 billion naira, up from 332.37 billion naira a year earlier.

MTN explained that data revenue excludes roaming data, which it said was reported under interconnection and roaming. Similarly, SMS revenue excludes incoming SMS while roaming. Incoming SMS messages while roaming are reported under Interconnection and Roaming.

Digital revenues include bulk SMS and USSD services, he said.

Value-added services, which increased by 55.6% to N70.55 billion, include airtime lending and mobile money (Fintech), mobile ID module backup services, subscriber (SIM), MTN said.

Pre-tax profit jumped 46.1 percent to N436.69 billion from N298.87 billion the previous year.

MTN’s operating profit for the year jumped 37% to N584.68 billion. This increase in operating income was, however, mitigated by the turn in financing activities. While finance charges increased by 11.4% to around N160 billion, finance income fell significantly by 24% to just N11.94 billion for the period.

MTN’s operating costs rose 25.9% to N390.5 billion from N310.25 billion, reflecting the high cost environment businesses have experienced in the Nigerian economy.

One of the main contributors to the decline in financial income is an item called net foreign exchange gain, which fell from N1.2 billion in 2020 to zero in the year under review. The others are changes in net gain on investments at fair value through profit or loss (FVTPL) and net gain on investments at fair value through other comprehensive income (FVOCI).

These are investments carried by the company at fair value through profit or loss or other comprehensive income, with the aim of ensuring that fluctuations in the value of these assets do not affect the result.

While the FVTPL fell to 46 million naira from 1.27 billion naira, the FVOCI fell to zero in 2021 from 791 million naira the previous year.

MTN has also proposed a final dividend of N8.57 per share, which together with a previously announced interim dividend brings the total dividend for the year 2021 to N13.12 per share.

With a year-end share price of N197, this gives a dividend yield of around 6.67%. Last year’s total dividend, measured against the N9.40 paid out by MTN in 2020, shows dividend growth of around 40%. Its earnings per share increased by 45.5% to N14.67.