Unilever profit up 34%
Unilever on Thursday reported a better-than-expected 34% rise in first-quarter profits, partly because of asset sales, and raised its full-year sales growth target.
The maker of Skippy peanut butter and Dove soap said its profit rose to $2.18 billion from $1.65 billion in the same period last year, due to in part to profits from disposals including Boursin cheese, and from raising prices.
Analysts expected a net profit of $1.59 billion on sales of $14.81 billion.
Shares rose 3.9% to $33.89 by midday in Amsterdam trading.
Sales from continuing operations for the quarter were flat at $14.77 billion from $14.67 billion a year ago, but in constant currencies Unilever would have reported a 6% increase in sales.
Chief Financial Officer Jim Lawrence said sales growth was largely due to price increases to cover the rising costs of commodities. Volumes continued to grow in developing markets, but were flat in mature markets, he said in a conference call.
The consumer goods and food giant said that underlying sales - which exclude sales from acquired and disposed businesses and the effect of currency changes - grew 7.2% in the first quarter, with 2.3% from volumes and 4.8% from price increases.
Operating profit was 39% higher, and operating margin, at 19.0% , was 5.3 percentage points higher than a year earlier, which included $797.73 million profits on disposals, mainly from the sale of the Boursin cheese business and the extension of the Pepsi-Lipton joint venture for ready-to-drink tea, Unilever said Thursday.
Lawrence said Unilever (UN) had reached about three-quarters of its target of $3.1 billion disposals for 2008, "We are under no time pressure, no rush," to complete the selloffs.
He said the company was on target to buy back $2.3 billion in shares this year.
Rob Mann, an analyst for Collins Stewart, said the rise Unilever had achieved a balanced underlying sales growth in all divisions, including the food division which had lagged behind cash advance now. He said with five consecutive quarters exceeding 5% sales growth, it "begins to look like a trend."
Keith Bowman of Hargreaves Lansdown applauded the cost savings from the group’s restructuring program, and said the quarter’s results could lift the cautious mood in the market toward the company.
"We have had a good start to the year, with strong organic growth across our categories and an underlying improvement in operating margin," said Unilever’s Patrick Cescau, Group Chief Executive.
"While it is early in the year, we now expect underlying sales growth in 2008 to exceed our 3% to 5% target range."
Filed under: business by Fred