Unilever sales growth beats the predictions
Gains achieved in home-care and personal-care businesses
UNILEVER reported quarterly sales growth that beat estimates and affirmed its outlook for the year in its first results announcement since rebuffing a takeover approach from Kraft Heinz.
Underlying sales rose 2.9 percent in the first quarter, the maker of Dove soap and Magnum ice cream said yesterday, compared with the 1.9 percent median estimate of analysts surveyed by Bloomberg. Growth accelerated from 2.2 percent in the fourth quarter.
New products The company cited gains in its home-care and personal-care businesses, while sales were unchanged in the food division. The ice-cream unit was helped by new products such as chocolate-coated Magnum pints in a tub. The shares rose as much as 1.3 percent in early trading in Amsterdam.
“It’s a solid kick-off, with ice-cream’s very strong finish to the quarter as the sun was shining in Europe,” chief financial officer Graeme Pitkethly said.
Unilever said it expects an improvement in its operating margins of at least 80 basis points this year as it steps up efficiencies in response to the Kraft Heinz takeover approach. Pricing increased by 3 percent in the quarter, while volume fell 0.1 percent, both measures beating analyst estimates.
After fending off the bid in February, chief executive Paul Polman said the company will deliver on promises to increase shareholder returns via buybacks and lift profitability goals. Unilever has grappled with lower consumer prices in Europe and a slowdown in emerging markets such as China and India that account for about 60 percent of sales. India and China are turning a corner and a market contraction in Brazil is moderating, Pitkethly said.
The company plans to divest its spreads unit, which includes the Flora brand, in a process that could fetch an enterprise value of around €6.6 billion (R94.07bn), according to a survey of analysts who cover the stock.
The company did not provide any immediate update on the sales process.
Unilever said it’s on track for full-year underlying sales growth in a range of 3 percent to 5 percent.
Underlying sales exclude acquisitions, divestments and currency fluctuations. – Bloomberg