Published: Fri, April 21, 2017
Business | By Sandy Mccarthy

Sales beat boosts Unilever's argument to go it alone

Sales beat boosts Unilever's argument to go it alone

Unilever's stormy year, which included the failed acquisition attempt by KraftHeinz - today released its first quarterly report of 2017 revealing steady sales growth.

Unilever was more aggressive than Nestle in raising food prices in the quarter, with a 3.4% increase, led by more expensive versions of Magnum and Ben & Jerry's ice cream.

"In Foods, our priorities are to build scale in emerging markets and to modernize the portfolio", Graeme David Pitkethly, the company's chief financial officer, said in a call with investors.

Unilever's share price has slipped marginally lower in London this morning, having lost 0.32 percent to 3,937.50p as of 08:12 BST, underperforming the broader United Kingdom market, with the benchmark FTSE 100 index having climbed into positive territory and now standing 0.16 percent higher at 7,130.03 points.

A day after posting solid Q1 results, Unilever has announced it has signed an agreement to acquire Sir Kensington's, a New York-based condiment maker, although the terms of the deal have not yet been disclosed.

Unilever shares rose Thursday in Amsterdam after the company posted quarterly sales that beat estimates.

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The challenge facing companies now is that some cost increases are provoking consumers to reduce purchases: Nestle said higher pricing weighed on shipments in Europe and also at its baby-food unit. Nestle, which increased prices 1 percent, was prompted to raise the cost of Nescafe as robusta coffee futures have gained 38 percent in the past year.

United Kingdom grocer Tesco briefly removed some Unilever items from its online store in 2016 after a dispute over pricing. But its personal-care unit fueled most of the growth, not Unilever's food division.

Polman said the actions the group is taking will keep it "on track for another year of underlying sales growth ahead of our markets, in the three to five per cent range".

Unilever said its quarterly interim dividend for United Kingdom shares will be 30.21p per share, a rise of 12% year-on-year.

Meanwhile Neil Wilson at ETX Capital markets remarked on the lack of mention of Kraft Heinz in first quarter statement " despite the fact it's had a clear impact on strategy at the Anglo-Dutch group.

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