No dividend for Unilever shareholders
Unilever directors have refused to pay dividend to the company’s shareholders, citing the high interest rate, difficult trading conditions, among many other challenges within the economic environment as some of the reasons for their action.
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The action of the company is the first in many years. Unilever paid 100 per cent dividend for the 2010, 2011 and 2012 financial years. In 2013, it built a new tea factory through its own resources.
At the 47th annual general meeting (AGM) of the company in Accra, the Chairman of the board of directors, Mr Ishmael Evans Yamson, said the decision was in the best interest of the company and all its shareholders.
“It should allow us to reduce our borrowing in effect so that we do not end up working for the banks. Allow us to fund the planned investments and have enough working capital to invest in the operations of our company,” he said.
The need to reinvest dividend was corroborated by the Managing Director of Unilever, Ms Maidie Arkutu, in an interview with the GRAPHIC BUSINESS on May 15 after the company’s AGM in Accra.
“Even though we made profit, we need to invest more in the organisation, and, therefore, we are using that money that is available to invest in capital, advertising and promotion and in our Unilever Sustainable Living Plan (USLP) to drive the organisation’s going-forward agenda,” she said.
She said the company responded to the dynamic economic environment by reviewing its business strategies.
“We do this on a continuous basis, so where we are today is about reinvesting and not borrowing so much necessarily. We are reinvesting what would have been paid to shareholders to help us reduce the amount of money we have to borrow,” she said.
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Financial performance
The company’s revenue grew from GH¢282.1 million to GH¢323.4 million, representing a growth of 14.6 per cent over 2012.
Financing cost declined marginally from GH¢3 million to GH¢2.5 million and profit after tax declined by 10.6 per cent to GH¢14.1 million.
But directors said in spite of the decline it was a good performance, considering the challenging economic conditions under which the company had to operate.
The decline, according to the financial statement, was due to a weak working capital position resulting from high inventories and receivables. We closed the year with cash and cash equivalent of negative GH¢7.7 million, a decline from the favourable GH¢11.6 million for 2012.
Again, through the USLP, the company focused on enhancing livelihoods through the delivery of products and services in health, hygiene and water.
Through its brands and the Unilever Ghana Foundation, it invested in the “hand washing with soap” campaign by Lifebuoy, which benefitted about one million children.
Ms Arkutu said as part of efforts to manage the ever-increasing cost pressures and the anticipated economic challenges, the company would pursue some major cost-saving initiatives by carrying out value chain analysis on its processes to eliminate non-value adding activities.
“Capital investment this year will include refurbishing our factory infrastructure and upgrading the personal care factory.
Investments behind our brands will continue aggressively in 2014, while we bring on board new amenity innovations in high value categories to strengthen our portfolio and make us more relevant to our consumers,” she said.