By Peter Evans
Unilever PLC (UL) will release its full-year earnings report
before the market opens in London on Tuesday. Here's what to look
out for.
EARNINGS FORECAST: Net income of EUR1.64 ($1.90) a share is the
consensus from a survey of 18 analysts, according to FactSet, a
slight fall from EUR1.66 reported a year earlier. The company
doesn't provide guidance on earnings expectations.
REVENUE FORECAST: Estimates call for sales of EUR49.93 billion,
compared with EUR49.80 billion a year earlier.
WHAT TO WATCH:
- EMERGING PROBLEM: Having bet big on emerging markets (which
make up nearly 60% of Unilever's sales, compared with around 40% at
biggest rival Procter & Gamble Co.), Unilever has suffered more
than most from the recent slowdown in those economies.
Third-quarter sales in China dropped 20%, while many other big
markets slowed dramatically as well. Investors will be eager to see
if signs of weakness develop into a bigger problem.
- MARGINALLY BETTER: Unilever has said it expects to improve its
operating margin this year as it benefits from raising prices
across emerging markets as well as a company-wide cost-savings
program. Last year's core operating margin--a key measure of
profitability--increased by 40 basis points to 14.1%, and analysts
expect another similar improvement.
- SIGNS OF IMPROVEMENT: After missing expectations in the
third-quarter--overall sales growth of 2.1% was the weakest in
years--can Unilever bounce back? Most observers appear to think it
can. "We consider 3Q to be the nadir, and expect improving organic
sales growth in 4Q with sustained pricing and slightly improved
volume," said Bernstein analysts.
Write to Peter Evans at peter.evans@wsj.com
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