A strong start to the year for Anglo-Dutch consumer goods group Unileverfailed to cheer the share price this morning.
First-quarter figures showed underlying sales growth of 3.4 per cent compared with the first three months of 2017, a figure that rose to 3.7 per cent once the company’s now-sold spreads businesses, including famous Unilever products such as Bovril and Marmite, are excluded.
Sales up but prices static
In beauty and personal care, underlying sales growth of 3.9 per cent took turnover to €4.9 billion, while the home care division enjoyed 4.9 per cent growth in underlying sales to €2.6 billion. The foods and refreshment business saw underlying sales growth of 2.3 per cent to €5.1 billion.
But Unilever shares showed little enthusiasm for the figures, dropping 89.5p in early trading in London to 3,857p, a fall of 2.27 per cent. It was suggested that investors were less interested in the underlying figure for sales growth than by the flat performance in terms of price growth, just 0.1 per cent for the group as a whole and 0.1 per cent for home care, 0.2 per cent for foods and refreshment and a fall of 0.2 per cent for beauty and personal care.
With its renowned product range, from Persil washing powder to Ben & Jerry’s ice cream and Dove soap to Hellman’s mayonnaise, Unilever’s performance provides good material for consumer demand analysis. These figures, showing underlying volume growth of 3.4 per cent for the group as a whole, suggest consumers are prepared to buy more goods provided the prices do not rise appreciably.
This pattern was repeated across Unilever’s international operations, in Asia, the Middle East and Turkey, volume growth was a healthy 4.7 per cent but price growth just 1.2 per cent.
Shake-up after takeover bid
In the Americas, volume growth was 3.6 per cent while prices declined by one per cent, while in Europe volumes grew by an underlying 0.7 per cent while prices declined by the same percentage.
It was announced in the Unilever annual report for 2017 that the company was looking at moves “to simplify the group’s capital structure”, specifically by ending the dual British and Dutch corporate identity and turn itself into a Netherlands-based company.
Shareholders will vote on this change later in the year.
The dual structure has been in place since 1930, when Lever Brothers of the UK merged with the Dutch company Margarine Unie. Well-known Lever Brothers products included the soaps Lifebuoy and Sunlight.
Looking ahead, Mr Polman said: “For the full year we continue to expect underlying sales growth in the three per cent to five per cent range and an improvement in underlying operating margin and cash flow.”