Results posted for the 2021 financial year have shown that while Unilever returned to profiting, MTN Nigeria raised its revenue by 45 per cent.
Analysis of the two companies’ results released to the Nigerian Exchange (NGX) this week indicated that Unilever returned to profitability last year after reporting a loss a year earlier.
The turnaround in the fortune of the company follows a 35 per cent rise in revenue to N70.52 billion from N52.2bn in the preceding year, it said.
However, while revenue rose by more than a third of the previous year’ level, cost of sales rose by a lower margin, rising 22.9 per cent to N 50.55bn, from N41.14bn.
Gross profit jumped by approximately 80 per cent to N19.92bn from N11.07bn in the preceding year. The real change, however, came in the operating profit, which grew from a loss position of N5.86bn in 2020 to a profit of N1.62bn.
A peep into the company’s financing activities reveals partly the reasons for the high costs it experienced in 2020. Its finance income for that year was N1.83bn, but this fell by over 50 per cent to N679 million last year. On the other hand, financing cost to N219.5m in the reporting year, down from N350m in the previous year.
The consequence of the above factors is that the net finance income fell in 2021 to 460.1m, from 1.48bn in the year before.
In the notes to the accounts, Unilever provides an insight into the causes of the high financing cost it experienced in 2020. That year, according to the company, interest expense on lease liabilities amounted to N84.53m, but this fell by more than half to N41.83m last year.
The company also reported that its plans to disengage from some of its activities were on course and would be concluded before the end of the current year.
“During the year, management committed to a plan to sell part of its manufacturing facility within the Home and Personal Care segment. Accordingly, part of that facility is presented as assets held for sale at the carrying amount of N262m.
“Efforts to sell the disposal group have reached an advanced stage and sale is expected before December 31, 2022,” it stated.
Unilever Nigeria also reported that it had concluded the sale of its Global Tea Business. In line with the Unilever Group’s directive, the company committed to a plan to sell this business since its announcement on 23 July 2020.
The tea business was not previously classified as held for sale or as a discontinued operation.
…as MTN’s profit rose by 45%
On the part of MTN Nigeria Communications Plc, its full-year profit after tax grew by 45.5 per cent.
Profit after tax rose to N298.65bn from N205.21bn in the 12 months to December 2021, it noted in a statement released at the close of business last Friday.
Service revenue for the period grew by 23 per cent to N1.65trn from N1.35trn a year earlier, the company stated.
MTN identified the major sources of its service revenue as Voice, data, SMS, interconnect and roaming, handsets and accessories, digital, value-added services and others.
Among these, Voice led in revenue, garnering N819.74bn in 2021, up from N766.39bn in the year before. This was followed by data, which brought N516.21bn, from N332.37bn a year earlier.
MTN explained that data revenue excludes roaming data, which it said was reported under interconnect and roaming. Similarly, SMS revenue excludes inbound roaming SMS. Inbound roaming SMS is reported under interconnect and roaming.
Digital revenue includes bulk SMS and USSD services, it stated.
Value added services, which rose by 55.6 per cent to N70.55bn, includes airtime lending and mobile money (Fintech), subscriber identification module (SIM) backup services, MTN stated.
Profit before tax jumped by 46.1 per cent to N436.69bn from N298.87bn in the year before.
MTN’s operating profit for the year jumped 37 per cent to N584.68bn. This spike in operating income was, however, moderated by the turn of financing activities. While finance cost rose by 11.4 per cent to approximately N160 billion, finance income dipped significantly by 24 per cent to just N11.94bn for the period.
MTN’s operating cost spiked by 25.9 per cent to N390.5bn, up from 310.25bn, reflecting the high-cost environment that companies experienced in the Nigerian economy.
One major contributor to the fall in finance income is a line item called Net Foreign Exchange Gain, which fell from N1.2bn in 2020 to zero in the year under review. The others are changes in net gain on Fair Value Through Profit or Loss (FVTPL) investments and net gain on Fair Value through Other Comprehensive Income (FVOCI) investments.
These are investments carried by the company as fair value through profit and loss or other comprehensive income, for the purpose of ensuring that fluctuations in the values of such assets do not affect the profit and loss.
While FVTPL fell to N46m from N1.27bn, FVOCI fell to zero in 2021 from N791m in the previous year.
MTN also proposed a final dividend of N8.57 per share, which, together with an interim dividend earlier announced, brings the total dividend for full-year 2021 to N13.12 per share.
With a year-end share price of N197, this gives a dividend yield of about 6.67 per cent. The total dividend for last year, measured against the N9.40 paid by MTN in 2020, shows a dividend growth of about 40 per cent. Its earnings per share rose by 45.5 per cent to N14.67.
