Unilever warns of ‘challenging markets’

Despite the hard trading conditions, Unilever has posted better-than-expected second quarter figures, driven by gains in its home and personal care units. Revenues, however, climbed with higher volume and prices, as well as strong underlying performance in emerging markets.

The dual London and Rotterdam-listed company reported pre-tax profits fell 14% to €3.6bn (£2.5bn) in the first half of this year, after last year’s results were boosted by the sale of Ragu pasta sauces.

At 09:19, Unilever shares were up 1.9% at 2,914p. But after stripping out one-time items and currency movements, per-share earnings rose by 8 per cent, helped partly by a share buyback.

“The sharpened strategies across each of our four categories and a step-up in our innovation pipeline are increasingly driving our growth and margin expansion in a continued challenging environment”, Unilever CEO Paul Polman said.

Unilever, which is becoming less of a food company and more reliant on products such as washing powders, shampoos and deodorants, said underlying sales rose 2.9 per cent in the second quarter, versus analysts’ average estimate for a gain of 2.6 per cent, according to a company-compiled consensus.

The FMCG brand is in the midst of turbulence from demand slumps in Asia, North America and Europe where sharp slowdowns have seen marketers redouble efforts to seek out new growth opportunities in competitive segments such as men’s grooming and haircare. However, the unit’s operating margin declined by 20 basis points as the company spent more on marketing.

He added: “We plan for another year of volume growth ahead of our markets, steady improvement in core operating margin and strong cash flow.”

Turnover for the six-month period increased 12 percent to 26.99 billion euros from 24.10 billion euros a year ago, including a positive currency impact of 10 percent.

It saw broad-based growth in Central and Eastern Europe, but weak momentum in the Nordic countries.

Huet said underlying sales – which exclude acquisitions, divestments, and currency fluctuations – should continue to accelerate in the second half of the year. The dividend will be paid on September 9 to the shareholders of record on August 7.

Sales in North America and Europe dropped 0.9 per cent and 0.7 per cent respectively, while sales in emerging markets – which accounted for 57 per cent of Unilever’s business last year – rose six per cent on an underlying basis.