In brief
- Profit Growth Driven by Revenue and Finance Gains: Unilever Ghana Plc (UNIL) reported a strong turnaround in its 9M2025 performance, with net profit rising by 27.6% y/y to GHS 59.1mn, supported by 12.6% y/y revenue growth to GHS 779.9mn, higher finance income (+11.7% y/y to GHS 1.7mn), and lower finance cost (-11.8% y/y to GHS 3.7mn). Despite a 1.9pp y/y decline in gross margin to 37.6%, operating and net profit margins edged up to 11.9% and 7.6%, respectively due to impressive cost containment.
- Input Cost Volatility Limits Margin Expansion Despite High Local Sourcing: Unilever Ghana faces margin pressure from persistent palm oil price volatility, despite sourcing 75% of raw materials locally. Global commodity price swings continue to affect production costs, limiting gross margin expansion and keeping our four-year average gross margin forecast at 29.9%
- Innovation-Led Portfolio Renewal to Support Topline Performance: The company’s focus on innovation and portfolio renewal, exemplified by the relaunch of Lifebuoy Carbolic Soap and ongoing product redesigns, supports steady topline growth. We expect these initiatives to drive a five-year revenue CAGR of 28.1% (2025 – 2029).
- Essential Portfolio Depth to Anchor Topline Performance: Unilever’s essential product portfolio, including staples such as Anapuna Salt, Pepsodent, and Sunlight, anchors revenue resilience, maintaining stable sales volumes amid economic fluctuations. Affordability-focused Stock Keeping Units (SKUs) and non-discretionary products strengthen consumer loyalty, ensuring consistent cash flow and incremental revenue gains over the medium term.
- Key risks to valuation: Higher-than-expected inflation, foreign exchange volatility, elevated interest rates, utility tariff hikes, rising energy prices, price surge in palm oil and other key raw materials, intensified competition, unfavorable tax policy shifts and continued underperformance of marketing and product innovation initiatives to generate sufficient sales uplift.
Rating Summary:
We maintain a HOLD rating on Unilever Ghana Plc as a 2.7% upward revision to our fair value estimate to GHS 20.28 per share yields a negligible upside of 2.5%. Our rating upside is anchored on anticipation of steady revenue growth over the short to medium term, supported by resilient consumer demand and well-entrenched brands.
However, margin expansion remains capped by persistent exposure to global palm oil price volatility despite achieving 75% local raw material sourcing. We forecast a four-year average gross margin of 29.9%, broadly in line with the historical 29.4%, as fluctuations in international oil benchmarks continue to influence input costs.
On the revenue front, we expect topline growth to strengthen, driven by product innovation and portfolio renewal initiatives such as the reintroduction of Lifebuoy Carbolic Soap, which previously contributed 12% to total revenue. Following a six-month production halt and subsequent activation campaigns launched in November 2024, we believe the brand’s revival is now supporting sales momentum. Meanwhile, Unilever’s strong base of necessity-led products, including Anapuna Salt, Pepsodent, Geisha Soap, Key Soap, and Sunlight, provides steady demand across income tiers, cushioning earnings during macroeconomic strain. We project a five-year revenue CAGR of 28.1% (2025 – 2029), underpinned by resilient core consumption and sustained brand relevance across Ghana’s FMCG landscape.