18th Oct 2018 13:12
LONDON (Alliance News) - Dove soap maker Unilever PLC said Thursday that it is considering its next move after it was forced to abandon its business simplification plan and relocation of headquarters to the Netherlands from the UK.
The Anglo-Dutch consumer goods company also reported a drop in revenue for the third quarter due to currency headwinds and disposals.
The company's shares were trading down 0.9% at 3,985.50 pence each on Thursday, down sharply from 4,227.50p at the start of October when Unilever cancelled plans to unify as a single Dutch entity.
In a news conference call on Thursday, Chief Financial Officer Graeme Pitkethly said that there had been a "period of very rich and fullsome engagement" with shareholders over the last few months.
The company scrapped plans to simplify its dual-headed structure due to mounting opposition from a number of major UK shareholders.
"We were disappointed about the outcome but encouraged that we had very strong support for the strategic objectives of unification despite there being challenges around the mechanics," said Pitkethly.
"The board will now consider its next steps and will of course continue to engage with shareholders, and we've already confirmed that we will proceed with the plans to cancel the high-voting NV preference shares, further strengthening our corporate governance," Pitkethly added.
The cancellation of these Dutch preference shares, which were acquired by Unilever, was intended to form part of the simplification but will now take place regardless.
For the three months to the end of September, Unilever recorded revenue of EUR12.5 billion, down from EUR13.16 billion in the same quarter a year prior, with impacts of 5.2% from exchange rates and 5.3% from the disposal of the company's spreads business.
The spreads business was sold to US buyout fund KKR Co Inc in July for EUR6.83 billion.
Unilever's Foods & Refreshment business, which includes Hellmann's mayonnaise and Ben & Jerry's ice cream brands, saw the most significant revenue drop, falling 13% to EUR4.81 billion from EUR5.56 billion.
Unilever, which also owns tea brands PG tips and Lipton, said black tea sales have continued to be challenging in developed markets, but it hopes to transform its tea portfolio through its acquisition of specialist tea company Pukka Herbs Ltd, as well as its recent takeover of the Tazo tea brand from Starbucks Corp.
Home Care revenue dropped much less significantly in the quarter to EUR2.51 billion from EUR2.59 billion while Beauty & Personal Care proved to be Unilever's only improving division, with revenue up at EUR5.21 billion from EUR5.02 billion.
For the nine months to the end of September, Unilever's total group revenue decreased to EUR38.7 billion from EUR40.89 billion with all divisions showing drop.
Foods & Refreshment's revenue for the nine months fell 8.1% to EUR15.99 billion from EUR17.40 billion, while Beauty & Personal Care recorded 1.8% drop to EUR15.23 billion from EUR15.50 billion.
On an underlying basis, which Unilever defines as excluding disposal and acquisition impacts, as well as the impact of price growth in countries with "extreme" consumer price inflation, the company said its third quarter saw "improved growth" across all divisions as it reported underlying sales growth of 3.8% compared to 2.6% in the third quarter the year before.
Chief Executive Officer Paul Polman said: "Growth accelerated in the third quarter across all divisions. We were able to increase prices whilst still maintaining good volume growth which reflects the strength of our brands and quality of our innovation programme. Our focus is building our business for the long-term continues to deliver high-quality growth."
The consumer goods firm proposed to pay a quarterly dividend of 33p per share, down from 34.35p in its second quarter.
Looking ahead, Unilever said it expects adjusted sales growth of between 3% to 5% and is on track to meet its 2020 objectives.
By Anna Farley and Elena Cherubini
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