Unilever Pakistan Foods Limited (PSX: UPFL) delivered strong growth in the first half of 2026, with sales rising nearly 29% and profit increasing by around 40%. However, shareholders received a smaller cash payout, making the dividend decision a key part of the latest results.
For the six months ended June 30, 2026, profit after tax rose to Rs4.34 billion, compared with the previous year, while the board recommended a second interim dividend of Rs350 per share, down from Rs444 a year earlier.
Sales and Margins Improve
UPFL’s half-year sales increased 28.9% to Rs25.26 billion, compared with Rs19.59 billion last year. Second-quarter sales also grew 32.3% to Rs12.06 billion.
The company attributed the growth to stronger volumes across Knorr Noodles, Rafhan and Unilever Food Solutions.
Gross profit increased to Rs10.83 billion from Rs7.53 billion, while the gross margin improved to around 42.9%, up 442 basis points.
Rising Expenses Limit Profitability
Despite stronger sales and margins, operating expenses increased sharply.
Distribution, administrative and other expenses rose nearly 50% to Rs4.35 billion from Rs2.91 billion. Other income also declined 41% to Rs365 million.
Operating profit nevertheless increased 30% to Rs6.84 billion, showing that the core business continued to perform well despite higher costs.
Profit Rises While Dividend Falls
Half-year EPS increased to Rs680.90 from Rs484.86, while second-quarter EPS rose to Rs349.89 from Rs222.25.
However, dividend growth moved in the opposite direction. The company had already reduced its first interim dividend to Rs331 per share from Rs525 a year earlier. With the latest Rs350 payout, total H1 cash dividends reached Rs681 per share, compared with Rs969 in the previous year.
The entitlement date for the second interim dividend is September 7, with share transfer books scheduled to close from September 8 to 10.
Cash Flow Shows Improvement
UPFL’s cash position improved considerably during the period.
Net cash generated from operations reached Rs5.45 billion, compared with an outflow of Rs633 million in the same period last year. The company spent Rs601 million on plant and equipment, while cash and cash equivalents increased to Rs3.57 billion from Rs812 million at the start of the year.
The stronger cash generation provides some support for the company’s financial position, even as management takes a more cautious approach to shareholder distributions.
Outlook Remains Cautious
The company continues to operate in an environment shaped by high living costs, inflation, commodity prices and geopolitical uncertainty. Rising administrative and distribution expenses show that stronger sales do not necessarily translate into proportional increases in shareholder returns.
There is also uncertainty surrounding Unilever Plc’s planned combination of its global foods business with McCormick, which remains relevant for local investors.
UPFL’s first-half results therefore present a mixed picture: strong brands, higher sales, wider margins and improved cash generation, but rising costs and a reduced dividend. The key question for investors will be whether the company can sustain its growth while protecting margins and maintaining attractive shareholder returns.