Unilever Posts Stronger 1Q Underlying Sales--Update
April 20 2017 - 03:16AM
Dow Jones News
By Saabira Chaudhuri
Unilever PLC reported a rise in underlying sales for the first
quarter as it raised prices, but results were weighed down by a
weak performance in developed markets like Europe and the U.S.
The Anglo-Dutch consumer-goods group, whose brands include Dove
soap and Ben and Jerry's ice cream, reported a rise in revenue to
13.3 billion euros ($14.3 billion) for the quarter up from EUR12.5
billion a year earlier.
Underlying sales-- which strip out the impact of gyrations in
foreign-exchange rates--grew 2.9%, beating analyst estimates for
growth of 2%.
Underlying sales in emerging markets increased 6.1% in the first
quarter, but were down from the 8.3% growth Unilever reported a
year earlier. In developed markets, sales declined by 1.5%, a
deceleration from the 0.3% decline a year ago.
Unilever blamed weaker market growth in North America while in
Europe it said consumer demand was weak and the retail environment
challenging.
The results come as Nestlé SA said first-quarter revenue grew
2.3% on an organic basis-which strips out currencies and
acquisitions-but was roughly flat from a year earlier. The company
is also struggling with sluggish consumer demand in North America
where it said confectionery and pet-care sales declined.
Both Unilever and Nestle are battling a difficult environment in
Brazil where consumers have been trading down to cheaper
brands.
Liberum analyst Robert Waldschmidt earlier this month said he
expects European consumer goods companies in the first quarter to
report their lowest level of growth since the recession amid poor
consumer demand, geopolitical turmoil and deflationary trends.
Unilever recently announced plans to sell or demerge its spreads
division, combine its foods and refreshments business units and
improve shareholder returns with a higher dividend and
share-buyback program. The revamp, the result of a strategic
review, came as Chief Executive Paul Polman looks to appease
investors after rejecting a $143 billion takeover offer from Kraft
Heinz Co.
Investors have for years called for the sale of spreads, which
has steadily declined as consumers eat less bread and, when they
do, increasingly opt for butter.
Thursday, Unilever disclosed standalone results from its spreads
business for the first time, saying that underlying sales growth
would have risen by 3.4% without the drag from the business, which
includes products such as margarine, but not condiments like
mayonnaise. Analysts have estimated the unit could fetch EUR7
billion to EUR8 billion if put on sale.
Unilever reported flat first-quarter sales in its foods
division, including spreads, and 5.4% growth in refreshments, which
includes tea and ice cream.
In personal care, Unilever reported a 3.1% rise in underlying
sales while in home care sales rose 4.1%.
-Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
April 20, 2017 03:01 ET (07:01 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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