Unilever Tea

Unilever Tea: 2008 Half Year Financial Results

Unilever Tea: 2008 Half Year Financial Statement (Balance Sheet/Income Statement)

Unilever Tea recently reported its financial results for the six-month period ended June 30th, 2008. Unilever Tea reported an 18% drop in Turnover and an operating loss of KES35 million compared to a profit of KES12 million in the first six-months of 2007. Profit after tax for the first six months of 2008 was KES1.5 million compared to a loss of KES82 million reported for the same period a year ago. Inventories increased by 12% in the first six months of 2008 while receivables and payments rose by 44%. Payables and accrued expenses as at June 20th, 2008 were KES1.2 billion or 39% compared to account details as at June 20th, 2007.

CASH FLOW ANALYSIS
Unilever Tea generated KES15 million from its operating activities, which represents a 109 per cent decrease, when compared to net cash generated from its operating activities for the same period in 2007. In the same period Unilever Tea did invested KES16 million their business. Unilever did not spend any cash on financing activities in the first six months of 2008.

MANAGEMENT COMMENTARY
The company’s profit before tax for the first half year improved from a loss of Kshs. 122 million in 2007 to a profit of Kshs.. 16 million in 2008.

the financial results have been impacted by adverse weather conditions during the first half of the year . A combination of drought,frost and hail damage reduced tea production by 30% compared to the same period in 2007.

Due to increased demand and reduced supplies of Kenyan teas in the market, US Dollar tea prices increased by over 35% compared to 2007. However this increase in price was insufficient to offset the much lower volumes and a 10% year on year appreciation of the Kenyan shilling. As a result, the company’s total revenues were reduced by 19%.

Significant costs associated with the post election crisis, low productivity and increasing prices of inputs have negatively impacted the cost of production during the period.

Dividend
The Directors do not recommend payment of an interim dividend.

Prospects
although crop volumes in 2008 will be significantly lower than 2007, US Dollar tea prices continue at a higher levels. Full year performance will now depend on more favorable weather conditions, reduced energy costs, a reasonable wage settlement with the union and fair exchange rate for exporters.

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