Unilever Ghana has defied the harsh economic environment and implemented smart internal strategies that have buoyed its revenue stream by 26.9 per cent from GH¢323.4 million in 2013 to GH¢410.5 million.
The fast-moving consumer goods (FMCG) manufacturer was impacted heavily by exchange rate differential occasioned by the local currency’s 39.4 per cent depreciation against the dollar, the deepening energy crises and high levels of inflation. However, it still managed to contain costs and implemented demand stimulating brand activation that helped it to deliver growth in all three key segments of the business.
Home care products grew by 32 per cent, personal care recorded 23.5 per cent growth, with foods category registering 11.5 per cent growth in 2014 over the last year.
The Chairman of the Board of Directors, Mr Ishmael Yamson, said the measures helped the company to salvage its losses after tax to GH¢710,000, down from the GH¢14 million loss after tax recorded in 2013.
“This turnaround in performance has been underpinned by our renewed focus on high profitable brands and continuous improvement in internal processes that have enhanced flexibility and speed of reacting to market dynamics,” Mr Yamson said.
The Managing Director of the company, Ms Maidie Arkutu, later explained to the GRAPHIC BUSINESS that management placed priority on the high value brands – those that sold quicker and brought higher returns – improving internal efficiencies, better procurement and indirect costs.
“We were really being cost focused and looking inside the organisation for wherever we can make some savings,” she said.
Rising costs and taming measures
The difficult operating environment impacted on the company’s cost levels, as cost of sales went up by 34.12 per cent from GH¢236.8 million in 2013 to GH¢317.6 million in 2014. Other costs included distribution expenses which went up by 27 per cent from GH¢7.4 million to GH¢9.4 million; brand and marketing expenses went up from GH¢21.3 million to GH¢28.89 million, up by 35.57 per cent, with administration expenses going up from GH¢37.99 million to GH¢49.13 million, an increase of 29.28 per cent.
Assets grew by 15.30 per cent, thanks to a GH¢13.5 million investment in plant and equipment expansion to meet growing demand and boost the production of high-yielding products to boost and sustain revenue growth. Unilever’s exports into West Africa also posted strong growth in the year under review.
Already, the company has stayed the remuneration for non-executive directors. The board did not also recommend any dividend for the year, as it did for last year. Shareholders received the news in good faith and rather commended the board, management and staff members for their smart measures in salvaging the fortunes of the company.
Unilever’s cost-saving measures matched with adjustments in the prices of some of its products started yielding results in the last quarter of last year, which continued into the first quarter of this year.
Ms Arkutu said the measures would continue into this year, especially since the strategies had proven effective
The managing director said the lessons picked from last year had entered this year “with the right people, portfolio and stronger brands”.
Unilever’s information technology tool, LeverEdge, an intelligent selling tool, was introduced last year and is currently providing great value to the business.
The software assists the sales team to replenish stocks at retail outlets, track which products are in stock, gauge demand levels and increase the overall penetration of the company’s products.
The company is, therefore, hopeful that the year 2015 will present better results than the previous year. — GB