Unilever Revenue Beats Estimates on Higher Selling Volume
Unilever (UNA), the world’s second- biggest consumer-goods company, reported first-quarter revenue growth that beat estimates and outstripped competitors Danone and Nestle SA (NESN), led by Dove skincare and Tresemme hair products.
Underlying sales, which exclude acquisitions, disposals and currency fluctuations, rose 8.4 percent from a year earlier, the maker of Hellmann’s mayonnaise said today in a statement. The average estimate of 30 analysts surveyed by Unilever was for a 6.4 percent gain. Units sold increased 3.5 percent, more than double the 1.6 percent gain analysts expected and the best performance since the fourth quarter of 2010.
Unilever shares rose the most in eight months. While sales growth was led by emerging markets, developed regions such as Europe and North America also contributed to the improvement as consumers snapped up new products such as Axe Anarchy deodorant. Revenue was also boosted by higher prices to counter soaring costs of commodities such as edible oils, which Chief Financial Officer Jean-Marc Huet said are “stubbornly high.”
“The quarter was pretty impressive and well ahead of expectations,” Andrew Wood, an analyst at Sanford C. Bernstein, said in a note. “Volumes were very strong and mid-single-digit growth in mature markets was a very pleasant surprise. The quarter should be well received by investors.”
Sales in developed markets, which make up 44 percent of the total, rose 4.2 percent in the quarter, helped in part by an earlier Easter holiday this year and an extra leap-year day of sales. Emerging-market revenue increased 12 percent.
Unilever shares climbed as much as 5.4 percent in Amsterdam, the steepest intraday advance since Aug. 4. The stock pared some of its gains after the European Commission said economic confidence in the euro region worsened this month, trading up 3 percent at 26.39 euros as of 11:53 a.m.
Sales growth at London- and Rotterdam-based Unilever topped that reported this month by Danone (BN), the world’s biggest yogurt maker, and Nestle, the world’s largest food maker.
“Unilever is defying its detractors by delivering another quarter of peer-beating results and market-share gains across the portfolio,” Simon Marshall-Lockyer, an analyst at Jefferies International, said in a note today.
Underlying sales rose 10 percent in the personal-care segment, which accounts for one-third of total revenue, driven by brands like Dove and Tresemme. Sales increased a similar amount in the home-care unit, fueled by new products and the introduction of Comfort fabric conditioner in Australia, New Zealand and South Africa. Food revenue increased 5.9 percent.
“Unilever’s home and personal-care business is firing on all cylinders,” Jon Cox, an analyst at Kepler Capital Markets, said in an interview before results were posted.
CFO Huet said underlying sales advanced about 5 percent in the U.K., where data yesterday showed the economy unexpectedly contracted 0.2 percent in the first quarter, pushing Britain into its first double-dip recession since the 1970s. Unilever gets about 5 percent of its sales from the U.K.
“The U.K. has been a difficult market,” with a high level of products sold at discounted prices, Huet said in a teleconference with reporters.
Across Europe, sales rose 5.1 percent, compared with a 2.7 percent decline in the year-ago quarter, Unilever said.
Raw Materials Costs
Unilever’s costs for raw materials in 2012 will be “slightly higher” than the mid-single-digit increase the company forecast in February, the executive also said, citing high prices for crude oil and vegetable oils.
“The volatility is pretty intense,” Huet told analysts on a conference call. Oil prices are 5.6 percent higher this year, and today oil futures traded near the highest in more than a week after Federal Reserve Chairman Ben S. Bernanke said that while further stimulus is unlikely, central banks “remain prepared to do more” to protect the economy.
Unilever’s total first-quarter sales advanced 12 percent to 12.1 billion euros. Analysts had estimated 11.9 billion euros.
“Our performance is pleasing given struggling economies, continued fragile consumer confidence and competitor activity,” Chief Executive Officer Paul Polman said in the statement. “We remain on track to deliver a modest improvement in full-year core operating margin, weighted towards the second half.”
Unilever raised its quarterly dividend 8 percent to 24.3 euro cents a share.
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