Unilever Ghana returns to profitability

The management of Unilever Ghana Ltd has overturned the fortunes of the business from a loss position a year ago to a path of remarkable profitability, and attributed the success to a change in strategy which focuses on cost reduction and market performance.

The turnaround strategy deployed a couple of years ago started yielding results by the close of 2014 but continued to yield positive results into last year.

Subsequently, the company’s headline revenues went up by 26.38 per cent to GH¢518.73 million at the end of 2015 from the GH¢410.45 million in 2014. The cost control initiative helped the company to keep its cost of sales in check at GH¢370.98 million, marginally up by 16.8 per cent from the 2014 figure of GH¢317.61 million.

Further controls on distribution expenses, brand and marketing investment expenses, administrative, restructuring and other costs led to a 1,122 per cent increase in the company’s operating profit from GH¢4.1 million in 2014 to GH¢50.38 million at the end of 2015.

“In a very competitive and dynamic environment, your company continued to grow, delivering a turnover of 26 per cent over 2014. Operating margin improved by 870 basis points leading to an operating profit growth of 1,122 per cent over 2014,” the Chairman of the Board of Directors, Dr Ishmael Yamson said at the annual general meeting of the company in Accra on May 17.

He said the profit attributable to members also grew to GH¢35.7 million up from a loss of GH¢710,000 million in 2014. Working capital also improved with cash and cash equivalents.  

Dividend

The company declared a dividend of GH¢0.40 per cent, the first time in two years, and representing almost 70 per cent payout of profit.

Dr Yamson said although the company expected the tight economic environment to lead to declining disposable incomes, the company believed in the medium to long-term prospects of the economy, saying “we will continue our long-term strategy of focusing on our high value brands, driving cost discipline, investing in our strong brands and maintaining a motivated and capable workforce”.

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Managing director’s address

The Managing Director of Unilever, Ms Maidie Arkutu, said last year’s performance confirmed the success of its strategy of focusing on operational excellence and product with higher profitability, while investing in production lines and information technology (IT) platforms.

The company’s Home and Personal Care business delivered strong growth at 31.5 per cent in value. “With a strong combination of both innovation and non-innovation-led growth drivers, all brands within the categories performed strongly,” she said.

While the home care delivered 19.6 per cent growth, the personal care sub-division grew by 42.6 per cent. Geisha and Lux pushed frontiers within the skin cleansing sub-category to grow by 36.9 per cent.

Shareholders, who were cooperative at the meeting and commended the board and management for the sterling performance, went ahead to vote for six resolutions, including the appointment of directors who retired by rotation, approval of directors’ fees and to authorise directors to fix auditor’s fees.