16th Apr 2015 12:15
LONDON (Alliance News) - Unilever PLC shares hit an all-time high Thursday after it reported a 12% increase in revenue for the first quarter of 2015, mainly thanks to helpful currency movements but also as improved sales in emerging markets lifted its underlying sales.
Unilever shares were amongst the best-performing in the FTSE 100 as the maker of consumer products including Ben & Jerry's ice cream, Lipton tea, Vaseline and Dove beauty products and Persil washing powder said revenue rose to EUR12.8 billion, with 10.6% growth driven by favourable currency movements.
Its underlying sales, which strip out the impact of currency movements and any acquisitions or disposals, rose 2.8%, as emerging markets sales grew 5.4%. Of the 2.8% underlying sales growth, 1.9 percentage points came from price increases and 0.9 point from higher sales volume.
Personal care saw the biggest turnover, with sales of EUR4.8 billion, but the company said that while growth in the sector improved, it remains below historic levels amid competitive markets. However, it expects to see an improvement in the second half of the year.
Regionally, Unilever said it was encouraged by the start to the year in Europe, as volumes picked up strongly although price deflation continued. The Americas also delivered strong growth in the quarter, despite difficult macro-economic conditions in Latin America that forced the company to raise prices to recover input costs.
Growth in the Anglo-Dutch company's emerging markets was driven by both volume and price and included a strong start for its food products. However, performance was mixed across markets with increased momentum in Africa, solid growth in south-east Asia and an improved performance in China partly offset by falling sales in Russia as consumer incomes were squeezed, and also in Australia in "a highly competitive market".
Analysts expressed concern about Unilever's growth potential in emerging markets going forward after the company said the picture was mixed, with India improving, China stabilising, but Brazil and Russia deteriorating.
Berenberg analyst Fintan Ryan said high exposure to some slowing emerging markets like Brazil and Russia, along with "perennial" volume problems in Europe in particular, will weigh on organic growth in 2015, although the improved confidence shown in the company's outlook, including in China, will be taken positively.
Liberum also expects weak market conditions, particularly in Europe and emerging markets, to persist in 2015 and 2016, hurting Unilever's growth prospects.
The company was more positive. "Despite high levels of currency and commodity volatility, we are now starting to see more tailwinds than headwinds in our markets, and expect our initiatives to deliver a further improvement in volume growth in the remainder of the year," it said as it said its developed markets in Europe remain weak while a modest price-driven pickup in North America has been sustained.
"Our priorities continue to be volume growth ahead of our markets, steady improvement in core operating margin and strong cash flow," Chief Executive Paul Polman said in a statement.
The sales growth was broad-based across its product ranges, with foods turnover up 3.2% to EUR3.2 billion, driven by strong sales in the run-up to Easter. Even the performance of the spreads business the company is looking to offload improved in the quarter, helped by the earlier Easter and good growth in emerging markets but with a continued drag from market contraction in the US and in Europe.
Personal care revenue was up 4.8% to EUR4.8 billion, refreshment revenue was up 2.3% to EUR2.3 billion and Home Care revenue rose 2.5% to EUR2.5 billion.
"We have further strengthened the innovation pipeline, and are increasing investment behind the core of our brands, as well as extending into premium segments and new markets. We continuously strengthen our go-to-market capabilities and sharpen our execution," Polman said.
Unilever said it will pay a quarterly dividend of EUR0.302, up 6% on the year before.
The company's shares are up 4.0% at 3,050.21p in London Thursday afternoon, making it one of the best-performing stocks on the FTSE 100 and market an all-time high for the London-listed shares.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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