Thursday, 22 June, 2017

Unilever first-quarter sales top expectations

NETHERLANDS-BRITAIN-UNILEVER-FOOD-SALE-MARGARINE Unilever is selling off its spreads business
Nellie Chapman | 21 April, 2017, 18:35

In a bid to drum up $3 billion in sales over the next 10 years, the company is expanding distribution of its products in major cities, including in Sir Kensington's hometown of NY.

It has also embarked on price hikes in the United Kingdom, following the post-Brexit vote collapse of the pound.

"Pricing was better than expected", said Jon Cox, an analyst at Kepler Cheuvreux. "Everybody has to increase prices, and generally that'll be sticky".

"We are excited to bring Sir Kensington's into the Unilever family".

If the consumer giant had accepted the $143bn (£112bn) bid from Kraft Heinz, it would have been a major headache for income seekers like Yarrow. Polman acknowledged he was caught off guard by the approach from Kraft Heinz, which is controlled by the private equity firm 3G Capital and Warren Buffett's Berkshire Hathaway Inc.

Nestle's quarterly revenue growth was the slowest this century, according to Andrew Wood, an analyst at Sanford C. Bernstein. A later Easter in 2017 pushed chocolate orders into the second quarter from the first this year.

The shares rose as much as 1.3percent in early trading in Amsterdam. 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.

Unilever chief executive Paul Polman later defended the company's decision to raise prices in the United Kingdom, saying in January that Britain should "get used to" price increases.

Mr Polman also said that he expects the company can boost its operating margins by 80 basis points this year as the business focuses on driving the efficiencies that Kraft Heinz said that it had identified whilst pursuing its takeover.

"The change programme "Connected for Growth" which we started implementing in the autumn past year is starting to bear fruit and is making Unilever more agile and closer to the local markets, unlocking both further growth and margin".

Distiller Pernod Ricard lifted the cost of some spirits and wines in the United Kingdom in March.

Positive aspects of the period for Nestle, the maker of Lean Cuisine meals, included accelerating sales in Europe and Asia, Kepler's Cox said.

Underlying sales of Home Care and Personal Care increased 3.4 percent to 7.8 billion euros. Its ice-cream division benefited from new Ben & Jerry's ranges.

Unilever said recently that it would aim to cut costs and sell or spin off its struggling spreads business, this includes brands such as Flora and Stork.