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Unilever Ghana Sees 10% Revenue Growth on Lipton Tea Exports

Unilever Ghana Ltd. expects sales to grow by 10 percent in 2013 as the food and household-goods maker starts making Lipton Tea in Ghana for export into French- speaking Western African countries.

The locally-processed tea “will no doubt improve our top line in terms of sales as well as profitability,” Managing Director David Mureithi said in an interview last week in the port city of Tema, where the company is based, 30 kilometers (19 miles) from the capital, Accra.

“Our forecast is to reach a turnover of 310 million cedis” ($157 million) in 2013, Mureithi said. Sales in the first quarter declined 1 percent to 75.8 million cedis, the company said on April 29. In 2012, revenue was 282 million cedis.

The Ghananian unit is part of London and Rotterdam-based Unilever NV (UNA)’s push into developing countries, which it expects account for 90 percent of annual sales growth over the next decade. The company said on April 30 it would spend as much as 292.2 billion rupees ($5.4 billion) increasing a majority stake in its Indian unit as it seeks to generate more emerging-market profit.

“Pressure on consumer purchasing power” has weighed on Unilever’s sales growth in Ghana after the government cut subsidies on gasoline and utilities to help narrow the budget deficit, Mureithi said. The managing director said last month he would leave the company on May 1 to pursue other interests.

Weakening Cedi

Unilever Ghana shares have advanced 58 percent this year, compared with a 50 percent gain on the Ghana Stock Exchange Composite Index. It is valued at 843 million cedis.

The company, which also makes Lux soap and Blue Brand spread, reported a 44 percent fall in net income last year after a weakening cedi caused input costs to soar. The cedi declined 14 percent in 2012 and is down 3.6 percent this year, the worst performer in West Africa, according to data compiled by Bloomberg. It rose for the first time in four days to 1.97 per dollar by 3:58 p.m. in Accra on April 30. Markets were closed for a public holiday yesterday.

Ghana’s economic growth has boosted demand for dollars in the country, pushing the cedi lower as the current account deficit widened to $4.9 billion in 2012 from $3.5 billion in 2011, according to the finance ministry.

Unilever Ghana has invested 7.5 million cedis in the tea factory, the first to be built in the world’s second-biggest cocoa producer. It will process as much as 1,000 tons of Lipton tea a year for sale in countries including Mali, Burkina Faso, Benin and Ivory Coast, Mureithi said.

The plant will process raw tea mainly imported from Kenya and Sri Lanka. “This is expected to reduce the cost of producing tea by 15 percent” because of lower tax and custom charges, Mureithi said. Pre-packaged tea would be bulkier and therefore more expensive to transport.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

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