Unilever first-quarter sales top expectations

Gladys Abbott
April 21, 2017

Consumer goods giant Unilever PLC on Thursday said it is on track for its underlying sales growth target in 2017, after reporting an increase in turnover for the first quarter.

Nestle, the world's largest packaged food company, posted sales growth of only 2.3 percent.

Unilever's share price has slipped marginally lower in London this morning, having lost 0.32 percent to 3,937.50p as of 08:12 BST, underperforming the broader United Kingdom market, with the benchmark FTSE 100 index having climbed into positive territory and now standing 0.16 percent higher at 7,130.03 points.

Andrew Wood, an analyst covering Unilever for Sanford Bernstein, described the figures as "a decent set of results".

Nestle, which increased prices 1%, was prompted to raise the cost of Nescafe after robusta coffee futures have gained 38% in the past year.

United Kingdom grocer Tesco briefly removed some Unilever items from its online store in 2016 after a dispute over pricing.

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Mr Polman also said that he expects the company can boost its operating margins by 80 basis points this year as the business focuses on driving the efficiencies that Kraft Heinz said that it had identified whilst pursuing its takeover.

Positive aspects of the period for Nestle, the maker of Lean Cuisine meals, included accelerating sales in Europe and Asia, Kepler's Cox said. In contrast, growth slowed to a near halt in the Americas region, hurt by declines in USA confectionery and pet care.

Within its product segments, Refreshment, Home Care and Personal Care grew ahead of its markets, while sales in Foods were flat, impacted by the later Easter this year. Its ice-cream division benefited from new Ben & Jerry's ranges.

Global food companies have been struggling with anaemic economic growth in many key markets amid changing and health-conscious lifestyles.

The company plans to divest its spreads unit, which includes the Flora brand, in a process that could fetch an enterprise value of around 6.6 billion euros (R94.07 billion), according to a survey of analysts who cover the stock.

Unilever said its quarterly interim dividend for United Kingdom shares will be 30.21 pence per share, up 12% year-on-year.

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