Unilever stands by outlook after first quarter meets expectations
Unilever announces a new share buyback program, for up to €6 billion ($7.4 billion) worth of stock, to start next month
London: Unilever, the Anglo-Dutch consumer goods giant, reported first-quarter sales figures that met expectations, helped mainly by increases in the volume of products sold, and maintained its full-year outlook.
The maker of Dove soap and Ben & Jerry’s ice cream also expressed confidence that shareholders will support its decision to change its corporate structure and have its main headquarters in the Netherlands.
Chief financial officer Graeme Pitkethly told Reuters that even though a small proportion of UK shareholders might be affected if Unilever shares were no longer in the blue-chip FTSE 100 index, most shareholders understand the reasoning for the decision and are supportive.
Shareholders will vote on the move later this year.
Unilever’s London-listed shares traded 0.6% lower at 12.40pm.
Unilever undertook a deep review of its business and structure last year after fending off an unwanted $143 billion takeover offer from Kraft-Heinz . The decision to sell its struggling spreads business also came from that review.
In light of the proceeds from the sale of spreads to private equity firm KKR, Unilever on Thursday announced a new share buyback program, for up to €6 billion ($7.4 billion) worth of stock, to start next month.
It also reported underlying sales growth of 3.4%, meeting an analysts’ consensus supplied by the company. Excluding the spreads business, underlying sales rose 3.7%. On that basis, analysts were expecting 3.6%.
Almost all of Unilever’s sales growth came from selling more products, with only a 0.1% boost from higher pricing. This may concern the market, as a recent rise in oil prices and costs for transportation could eat into margins if not passed on to customers.
The chief financial officer said the balance of price and volume will improve in the second half of year.
A sharp slowdown in pricing growth in last year’s fourth quarter weighed on Unilever’s shares despite overall sales performance that was its best in six quarters.
Consumer packaged goods companies are all under pressure to boost performance, as sales have slowed due to changing consumer tastes and shopping habits and a slew of upstart rivals.
Reported turnover fell 5.2% to €12.6 billion, hurt by currency exchange rates. Analysts were expecting €12.84 billion.
The company stood by its forecast for 2018 sales growth of 3-5%.
Swiss food group Nestle confirmed its full-year guidance after organic sales growth accelerated to 2.8% in the first quarter of 2018, helped by improving volumes. Reuters
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