Unilever sales rise on higher prices

Unilever is selling off its spreads business

23 April, 2017

The company's shares are up 1.5% as sales rose 2.9% in its first quarter beating a forecast of 2%. Specifically, they see organic sales growth stopping at between 3% and 5% for the full year, which should keep the company just ahead of Procter & Gamble (NYSE:PG) and Kimberly-Clark, which are expecting to grow 2% each in the current fiscal year.

Unilever, whose products include a vast range of food, beverages, cleaning agents and personal care items, was the subject of a failed £115bn bid from Kraft Heinz earlier this year. Each company's increases were above analyst estimates. Compared with Unilever, Nestle has much more exposure to the shrinking North American packaged food market, where a late Easter and one less trading day in the quarter compounded weakness due to changing consumer tastes and intense competition. Pitkethly said it was "a bit of a relief" to be able to finally "engage wholeheartedly" with private equity suitors which have been circling the unit for some time.

Unilever's turnover was up 6.1% at EUR13.3bn, including a 2.4 percentage point benefit from exchange rates.

After fending off Kraft Heinz in February, Chief Executive Officer Paul Polman said Unilever will deliver on promises to increase shareholder returns via buybacks and lift profitability goals.

As of 09:20 BST, Unilever's share price had added 1.13 percent to 3,982.00p, outperforming the broader London market, with the benchmark FTSE 100 index having slipped marginally into the red and now standing 0.05 percent lower at 7,110.85 points.

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Excluding the struggling margarine and spreads business, which Unilever plans to sell by the end of the year, underlying sales rose 3.4 percent.

Ben & Jerry's ice cream reported double-digit growth, while Solero and Magnum both launched new products, which contributed to the Refreshment division's 5.4% rise in underlying sales.

The quarterly dividend has been raised by 12 percent.

"We're starting to see some inflationary pressures in the United Kingdom from the depreciation of the pound", Unilever chief financial officer Graeme Pitkethly said, adding that the company's competitors were also raising prices in the country.

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