Unilever reports strong growth in Q1, maintains outlook

The maker of Ben & Jerry’s ice cream and PG Tips has expressed confidence that shareholders will support its decision to change its corporate structure and have its main headquarters in the Netherlands.

According to Reuters, Chief Financial Officer Graeme Pitkethly said: “Even though a small proportion of UK shareholders might be affected if Unilever shares were no longer in the blue-chip FTSE 100 index. FTSE, most shareholders, understand the reasoning for the decision and are supportive.”

The company reported underlying sales growth of 3.4 percent, meeting an analysts’ consensus supplied by Unilever. Excluding the spreads business, underlying sales rose 3.7 percent. On that basis, analysts were expecting 3.6 percent.

Commenting on the results, CEO Paul Polman says: “The first quarter demonstrates another good volume-driven performance across all three Divisions. The broad-based growth, including over 4 percent volume growth in emerging markets, shows that the ‘Connected 4 Growth’ program is working and enhancing our long-term compounding growth model. We are further improving the quality and speed of our global and local innovation as a result of a more agile, consumer-facing organization. At the same time, we are maintaining strong delivery from our savings programs and expecting to complete the exit from spreads in the middle of the year.”

The company is standing by its forecast for 2018 sales growth of 3-5 percent.

“For the full year, we continue to expect underlying sales growth in the 3-5 percent range and an improvement in underlying operating margin and cash flow that keep us on track for our 2020 goals. We intend to start a share buy-back program of up to €6 billion in May to return the expected after-tax proceeds from the spreads disposal. We are raising the dividend by 8 percent, reflecting confidence in our outlook.”

Foods & Refreshment
The Foods & Refreshment Division continued to build its presence in emerging markets and sustained strong performance in foodservice channels. At the same time, we further modernized the portfolio by responding to consumer needs in fast-growing segments such as “free-from,” vegan, health and wellness.

Innovations behind Unilever’s premium ice cream brands contributed to another good start to the year. These included the launch of Magnum Core and Praline variants, which provide their most indulgent ice cream experience yet, and the roll-out of the successful Ben & Jerry’s non-dairy platform from the US into Europe. Breyers Delights’ low-calorie, high-protein variants have now been launched in 11 countries. Leaf tea continued with the positive momentum shown in 2017, driven by strong innovations in green and other specialty teas in India, where the company extended market leadership, and strong performances in North Africa. The recently acquired Pukka Herbs organic herbal tea business had an outstanding first quarter.

In foods, Knorr delivered another quarter of growth above the Group average, primarily driven by cooking products in emerging markets, as well as innovations in developed markets. These included the launch of Knorr mini meals in Europe, snack products with natural and nutritious ingredients, and Knorr Selects side dishes in the US. Hellmann’s continued to communicate its strong natural claims while further extending its range with the launch of avocado and sunflower oil variants with Omega 3 and Vitamin E in the US. Volume growth improved, however pricing turned negative in an increased promotional environment.