Unilever sales rise in first half of 2017

Marco Green
July 20, 2017

Polman predicted "accelerated growth" in the second half of the year for Unilever and said underlying sales growth for 2017 would be in the 3%-5% range.

Unilever - which makes products including Marmite and Ben & Jerry's ice cream - said pretax profit in the first half of the year grew to EUR4.63 billion compared to EUR3.64 billion in the first half of 2016, as revenue rose to EUR27.73 billion from EUR26.28 billion.

Unilever will pay a quarterly dividend of EUR0.3585 per share in September. He said preparations to auction it were well under way.

However, it noted tougher conditions in some overseas markets, flagging headwinds from Brazil's economic and political crisis, and the introduction of an Indian goods and services tax this year.

Currency fluctuations also helped profits, even though sales "remained weak" in Europe.

"Behind these results are over 1 billion euros of savings and we've actually reinvested half of that into ensuring that we have more competitive pricing so ultimately we do think consumers do get the better deal", he added.

The update comes after earlier this year, the company announced plans to sell or de-merge its spreads business, in the wake of Kraft Heinz's takeover bid which prompted Unilever to look for ways to unlock shareholder value.

Further, the company said it recorded strong progress against the strategic objectives set out for 2020.

"Kraft Heinz may have gone away, but Unilever know they can not relax and investors expect them to raise their game", he said.

The improved results reflected underlying sales growth and improved underlying operating margin.

Liberum reiterated a "hold" rating and target price of 3,870p, saying the shares appear to be fully priced. Underlying sales growth was 3 percent.

"While more aggressive EPS growth underpins the shares, failure to deliver on lifted expectations could lead to a pull-back", Liberum warned. "In our view, the risk / reward outlook for the shares is now more balanced".

The stock is outperforming the broader United Kingdom market, with the benchmark FTSE 100 index now 0.43 percent higher at 4,351.50 points.

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