UK investor, Unilever Group, has acquired the tea business of its subsidiary, Unilever Nigeria, through another subsidiary, Unilever Tea MSO Nigeria Limited, a move that will affect the earnings of the Nigerian listed entity.
Unilever Nigeria sold the tea business for N5.4 billion in October 2021 to reduce its exposure in the tea market, where it generated a profit for the year of N2.72 billion between January to October last year.
Although the tea business is now wholly-owned by Unilever Tea MSO, Unilever Nigeria has been contracted to assist in the manufacture and sale of the tea products for a fee based on a Transitional Service Agreement.
However, “All proceeds from the sale are remitted to Unilever Tea MSO Nigeria Limited and all costs incurred are charged back to Unilever Tea MSO Nigeria Limited.” a statement in its Annual Financials Statement for 2021 period, released on Monday, shows.
The discontinuation of the tea business will drag down the turnover of Unilever Nigeria, as the tea segment contributed N9.04 billion to the earnings of the firm within nine months in 2021 – with the disposal, Unilever Nigeria will no longer earn from the tea market.
Meanwhile, Unilever Nigeria reported its revenue for full year period of 2021 was N70.52 billion, against the N52.21 billion generated during the corresponding period of 2020.
The company exited 2020 loss of N3.96 billion with N1.12 billion profit for the year under review, signaling a return to profitability for Unilever Nigeria.
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