In brief
- Profit growth driven by topline recovery, non-core items and lower costs: Unilever Ghana delivered a notable FY2025 performance, recording a 62.5% y/y surge in net profit to GHS 94.4mn, driven by 11.7% y/y revenue growth to GHS 1.0bn, a 93.6% y/y decline in restructuring costs to GHS 1.3mn, and a 126.3% y/y surge in finance income to GHS 3.9mn.
- Product relaunch to drive volume recovery and support sales growth in 2026: We expect the relaunch of Lifebuoy Carbolic Soap, after a six-month suspension, to boost Unilever Ghana’s sales and strengthen category performance. We believe the strong brand equity and mass-market appeal will drive revenue growth, supporting our projected revenue of GHS 1.2 bn (up 16.8%) in FY2026 and a five-year CAGR of 18.2%, above the historical 17.9%.
- VAT reduction to support demand and topline performance: We expect the reduction of Ghana’s effective VAT from 21.9% to 20.0% in 2026 to boost consumer purchasing power and demand for Unilever Ghana’s products, particularly in personal care. This tax cut, alongside the removal of the 1.0% COVID levy, should drive higher sales volumes, support top-line growth, and strengthen market penetration, underpinning our projected revenue of GHS 1.2 bn (up 16.8%) in 2026.
- Utility tariff hike to elevate Unilever Ghana’s operational costs and impact margins: We expect the recent utility tariff hike, effective January 2026, to exert a moderate upward pressure on operating expenses, with electricity tariffs rising by 9.86% and water tariffs by 15.92%. Given the company’s reliance on stable energy and water supply for production, we project OPEX to grow by 17.0% y/y to GHS 313.4mn in FY2026, translating into a modest contraction in operating margin by 1.2pp y/y to 12.7%.
- 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, revising our fair value down by 1.13% to GHS 20.05 per share, implying a modest upside of 1.32% from the current GHS 19.79. We forecast revenue growth of 16.8% y/y to GHS 1.2 bn in FY2026 (vs 11.7% y/y to 1.0bn in FY2025), supported by the reintroduction of Lifebuoy Carbolic Soap, targeted activation, enhanced distribution, the removal of the 1.0% COVID levy, and restrained price pressures that boost consumer purchasing power.
On costs, palm oil price volatility remains a key risk, though input tax credits partially mitigate margin pressure. Energy-intensive operations expose the company to recent utility tariff hikes (electricity +9.86% | water +15.92%), driving OPEX growth to GHS 313.4mn and compressing operating margins to 12.7% (vs 13.9% in FY2025). We expect disciplined cost management and operational efficiency to contain the impact.
Overall, Unilever Ghana is positioned to benefit from revenue tailwinds, but near-term input and operational costs justify a balanced “Hold” rating. Our fair value estimate reflects a blended valuation approach: DCF (40%), P/E (30%), and EV/Sales (30%), with a 15.16% risk-free rate, WACC of 17.3%, and terminal growth of 5.0%.