Unilever soars to record as revenue growth beats estimates

by **Cals** Fri 17 Apr 2015, 00:16

Unilever soars to record as revenue growth beats estimates

(Apr 16): Unilever, the maker of Magnum ice cream and Flora spreads, reported estimate-beating first-quarter sales growth, sending the shares soaring to a record as an earlier Easter holiday boosted sales at its struggling food division.
Underlying revenue increased 2.8 percent, London- and Rotterdam-based Unilever said Thursday, compared with the 2.1 percent median estimate of 17 analysts surveyed by Bloomberg. Growth accelerated from the fourth quarter’s 2.1 percent, despite the company having flagged a falloff in January.
“It’s a good start,” Chief Financial Officer Jean-Marc Huet said in a phone interview. “China has performed better than expected, and food has done better, some of that due to Easter coming earlier this year.”
Unilever’s beat follows competitor Danone, which said Wednesday that a recovery in its core dairy business boosted sales. Still, Unilever Chief Executive Officer Paul Polman is grappling with the toughest stretch of his six-year tenure as the company’s broad emerging-market presence shifts from a boon to a burden amid reduced consumer spending from China to Brazil.
Unilever rose as much as 5.2 percent to 3,087 pence in London, the steepest intraday gain since July 2012. The Amsterdam-listed shares rose as much as 4.5 percent to 42.75 euros. Shares of Danone also gained, along withNestle SA, which reports first-quarter sales tomorrow.
After a 20 percent sales decline in China in the third and fourth quarters of last year caused by an inventory backlog, revenue in that region was “stable” in the first quarter, Huet said. Brazil, which accounts for almost 10 percent of sales, is “under pressure” and a “difficult place right now,” the executive said. Analysts forecast Brazil’s economy will shrink this year even as inflation breaches the ceiling of the target range for the first time since 2003.
Easter Shift
The Easter shift, meanwhile, boosted Unilever’s sales growth in the period by as much as 0.4 percentage point, Huet said. Food sales rose 2.9 percent, fueled by Knorr cooking ingredients and Hellmann’s mayonnaise. The developed-market spreads business, which is being separated into a standalone unit this year, continued to suffer from declining demand.
“While the strength of Europe and foods will raise suspicions that the earlier Easter potentially had a bigger impact than some were anticipating, we nonetheless view this as a positive release,” Jeff Stent, an analyst atExane BNP Paribas, said in a note.
Sales volumes should improve over the course of the year, according to the company. Unilever is adding new products such as the Ben & Jerry’s Cookie Core range and smaller sized ice creams in Europe to boost demand.
“The actions we have been taking to put us on track for higher levels of growth are starting to pay off,” Polman said in a statement.
Underlying sales exclude acquisitions, divestments, and currency fluctuations.