Unilever Pakistan Foods Limited (UPFL), a subsidiary of Conopco Inc. USA, experienced a notable 27% decline in its profit-after-tax, amounting to Rs3.8 billion for the first half of 2024. This marks a significant drop from the Rs5.19 billion profit recorded during the same period last year, according to a notice sent to the Pakistan Stock Exchange (PSX) on Friday.
The company, which produces and markets consumer and commercial food products, attributed this decline to sustained inflationary pressures, including steep increases in electricity tariffs and petroleum prices, which have eroded consumers’ purchasing power. These factors, coupled with a shift in consumer spending towards essential goods over non-essential items like instant noodles, led to a 9.3% decrease in sales.
UPFL’s sales for H1 2024 fell to Rs17 billion from Rs18.74 billion in the corresponding period last year. The company’s gross profit also saw a decrease of nearly 20%, standing at Rs6.62 billion. Additionally, a significant rise in taxation, which increased to Rs1.48 billion from Rs360 million in the previous year, further contributed to the decline in profits.
Despite these challenges, the company managed to achieve a gross margin of 38.9% through strategic price adjustments. However, earnings per share (EPS) dropped by 26.7% to Rs597.33, compared to Rs814.67 in the same period last year.
Unilever’s other income, however, rose to Rs1.58 billion in H1 2024, compared to Rs1.18 billion in the same period last year. For the quarter ended June 2024, the company reported a profit of Rs1.98 billion, up from Rs1.83 billion in the corresponding quarter last year, with EPS at Rs311.46 compared to Rs287.78 previously.
The company also announced a second interim cash dividend of Rs623 per ordinary share, payable to shareholders as of August 26, 2024.
Looking ahead, Unilever Pakistan Foods anticipates a gradual recovery in demand for its non-discretionary products, supported by signs of macroeconomic stability and easing inflation. However, the company noted that budgetary measures aimed at increasing revenue could further impact consumers’ purchasing power.
