Unilever sales and profit slump in H1
THE HAGUE: Anglo-Dutch consumer giant Unilever yesterday revealed a drop in both sales and profit in the first half of 2018, saying markets remained “challenging” amid moves to leave its London base this year.
Sales fell some 5.0% to €26.4 billion ($30.7 billion) in the first six months, down from €27.7 billion on the same period in 2017.
Net profit also slid by 2.4% to €3.2 billion, down from €3.3 billion from January to June last year, as the company took a hit from a 11-day truckers strike in Brazil and currency fluctuations.
Unilever, which has over 400 household brands in its portfolio, said however the first half showed “a solid, all round performance with some challenging markets.”
Chief executive Paul Polman insisted “our expectation for the full year is unchanged,” adding the Rotterdam-based company believed it would have underlying sales growth in the 3% to 5% range in 2018.
He also announced that Unilever had completed the sale of its margarines and butters division to US private equity giant KKR & Co Inc by its July 2 deadline, saying in a conference call it was “one of the most involved and complex transactions in Unilever’s history.”
Unilever was founded in 1930 after the Dutch margarine producer Margarien Unie merged with British soapmaker Lever Brothers.
Its brands include such household names as yeast extract Marmite, PG Tips tea and Persil washing powder, Knorr soup as well as Dove beauty products and Magnum ice cream.
Unilevers shares added 0.3% in morning trading in London, in line with gains on the blue chip FTSE 100 index.
For over a century, Unilever has maintained a dual-headed structure, with listings on the London, Amsterdam and New York stock exchanges.
But in March, the company announced it was choosing The Netherlands over London to host its headquarters, dealing a blow to Britain’s efforts to keep multinational companies following Brexit.
“The simplification of our dual-headed structure is an important next step to unlock the flexibility needed for future portfolio change,” Polman said, adding that “it makes us simpler and further strengthens our corporate governance.”
The decision followed a failed hostile bid by US rival Kraft Heinz Co last year, which analysts said played a key role in Unilever’s decision as the Netherlands has stronger rules to protect companies against takeovers.
But the move to leave London has left many investors uneasy as it will likely see the company forced to withdraw from the coveted FTSE 100 index.
Chief financial officer Graeme Pitkethly said Unilever bosses had held a series of private meetings with worried shareholders and with FTSE 100 leaders on the issue.
“But it did become very clear that we are extremely unlikely to be included in the index at the moment of unification,” he said, confirming he expected the move to quit London to be implemented by the end of December.
Unilever said yesterday that it would hold a general meeting for shareholders on the issue on October 25 and 26, with documents about its position to be sent out six weeks in advance.
The decision to leave London will need to be approved by a majority of between 50% to 75% of shareholders, depending on what type of shares they hold.
But Pitkethly said the company was “very confident” the move would be approved, adding “there’s been really universal support” for the plan.