Unilever Nigeria Plc delivered strong sales and improved operating margins in the first half of 2026, but rising taxes and finance costs constrained profit growth, according to its financial results for the six months ended June 30, 2026. Revenue climbed by 22.2 percent to ₦119.92 billion from ₦98.10 billion in the same period of 2025, reflecting sustained consumer demand despite economic pressures on household spending. Gross profit surged by 30 percent to ₦54.74 billion, with the gross profit margin expanding to 45.6 percent from 42.9 percent, indicating effective pricing strategies and better cost management amid inflation.
Operating profit rose by 29.5 percent to ₦24.36 billion, while the operating margin improved to 20.3 percent from 19.2 percent, showcasing stronger conversion of sales into earnings. This performance highlights the resilience of Unilever’s core business operations. However, rising expenses tempered the gains. Selling and distribution costs jumped by 58.8 percent to ₦4.77 billion, outpacing revenue growth, while marketing and administrative expenses increased by 25.7 percent to ₦26.39 billion. These higher expenditures may reflect investments in logistics, transportation, and market expansion, but their long-term impact on profitability remains to be seen.
Finance income grew by 11.8 percent to ₦6.51 billion, but finance costs more than tripled to ₦1.70 billion from ₦483.50 million, leading to a 9.8 percent decline in net finance income to ₦4.82 billion. Despite this, profit before tax still rose by 20.8 percent to ₦29.18 billion, driven primarily by operational strength rather than one-time gains. The biggest drag came from taxation, which increased by 39.3 percent to ₦13.58 billion, pushing the effective tax rate to 46.5 percent from 40.4 percent the previous year.
As a result, profit after tax grew by only 8.3 percent to ₦15.60 billion, significantly lagging behind revenue and operating profit growth. The net profit margin fell to 13 percent from 14.7 percent, and basic and diluted earnings per share rose modestly to ₦2.72 from ₦2.51. In the second quarter alone, revenue rose 18.8 percent to ₦60.75 billion, and operating profit increased by 22.1 percent to ₦12.87 billion. Yet, profit declined by 3.1 percent to ₦8.58 billion due to a 57.8 percent spike in quarterly tax expenses to ₦7.18 billion, raising the effective tax rate to 45.5 percent from 33.9 percent in the same quarter of 2025.
Investors are encouraged by Unilever Nigeria’s operational performance, including double-digit revenue growth and margin expansion, which suggest improved pricing power and efficiency. However, concerns remain over rapidly rising distribution costs, sharply higher finance charges, and an elevated tax burden that limits shareholder returns. While the company remains profitable and its core business is stronger, sustained margin improvements and better cost control will be critical in the second half of 2026 to ensure earnings growth keeps pace with revenue.
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