Unilever Nigeria’s Resilient Growth: Analysts Forecast Margin Recovery

Despite a challenging operating environment, Unilever Nigeria’s topline growth has remained strong, driven primarily by its food products segment.

Analysts at Cordoros Securities expect a recovery in the company’s EBITDA margin, projected to rise by 139 basis points to 15.5% in 2025, supported by strong revenue growth, improved operational efficiency, and increasing cash reserves.

Key Highlights:

– Revenue growth is expected to reach 30.1% year-on-year in 2025, driven by strategic price increases and volume growth across product segments.
– Cost optimization measures are likely to yield further positives, reducing the cost-to-sales ratio by 80 basis points to 62.3%.
– Gross and EBITDA margins are expected to expand to 37.7% and 15.5%, respectively, in 2025.
– Earnings per share (EPS) is projected to rise to NGN4.96 in 2025, supported by operational efficiencies and a strong cash position.

Valuation and Recommendation:

Analysts have set a target price of NGN47.76 per share, derived from a blend of discounted cash flow (DCF) and sector-relative valuation estimates. Despite the positive outlook, the recommendation remains “HOLD”, given the current valuation multiples.

Dividend Prospects:

Unilever Nigeria’s strong liquidity profile and improved operating cash flow are expected to support dividend growth. A dividend per share of NGN1.34 is forecast for 2025, translating to a dividend yield of 3.1% based on the last closing price.