Unilever's 1Q Sales Soar, Ups Dividend - Analyst Blog
26 April 2013 - 1:04PM
Zacks
Unilever N.V. (UN) posted solid first quarter
2013 results. The company recorded underlying (excluding the impact
of currency, acquisitions and disposals) sales growth of 4.9% (in
local currency) in the first quarter. The increase was driven by
volume and pricing gains of 2.2% and 2.6%, respectively. Increased
investment in innovation, improved product quality and introduction
of brands in new markets contributed to the growth. Unilever’s
board also hiked its dividend by 10.7% (in local currency) in the
first quarter.
This fast-moving consumer products giant also performed well in
the emerging markets despite unfavorable foreign currency
translations. Emerging markets underlying sales expanded 10.4% (in
local currency) while sales in the developed markets remained
sluggish due to global macroeconomic headwinds.
Segment Details
Unilever witnessed strong growth in Home Care and Personal Care
categories and modest growth in the Refreshment category, despite
weak ice cream sales in Europe. However, the Foods category was
sluggish due to weak performance of spreads, which offset the
improved performance in savory and dressings.
Personal Care:The segment delivered underlying sales growth of
8.3% in the first quarter, driven by volume gains of 5.6% and
pricing benefit of 2.6%.
Home Care:The segment delivered underlying sales growth of 9.4%
in the quarter, riding on volume growth of 5.2% and price increase
of 3.9%.
Foods:The segment’s underlying sales declined 0.5% in the
quarter as a 1.4% decline in volumes offset the positive pricing
benefit of 0.9%.
Refreshments: The segment delivered underlying sales
growth of 2.2% in the quarter owing to price increase of 3.9%,
which offset a 1.6% volume decline.
Overall, we are optimistic about Unilever’s wide portfolio of
brands, which helps it to maintain a dominant share in the market.
Unilever has been strengthening its portfolio by expanding through
a number of acquisitions. Further, Unilever has been divesting its
businesses to shed its non-core operations, thereby optimizing
resources and allocating them to more promising markets.
Unilever sold its North America frozen meals business (brands of
Bertolli and P.F. Chang) to ConAgra Foods Inc.
(CAG) in Aug 2012. Later in Jan 2013, Unilever agreed to sell its
Skippy peanut butter business to Minnesota-based meat producer
Hormel Foods Corporation (HRL).
However, we remain concerned with the uncertain macro-economic
environment, going forward, particularly in Europe. Though the
company forecasts volume gains and strong free cash flow in the
near-term, commodity cost inflation will continue to be a headwind.
Unilever holds a Zacks Rank #4 (Sell).
However, you can consider Flower Foods, Inc
(FLO), which is currently doing well and holds a Zacks Rank #1
(Strong Buy).
CONAGRA FOODS (CAG): Free Stock Analysis Report
FLOWERS FOODS (FLO): Free Stock Analysis Report
HORMEL FOODS CP (HRL): Free Stock Analysis Report
UNILEVER N V (UN): Free Stock Analysis Report
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