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Unilever slims down

Household goods giant Unilever performed well in what was a very challenging year
January 20, 2015

Unilever (ULVR) chief executive Paul Polman stresses the challenges posed by 2014: significant economic headwinds, not least adverse exchange rates, and weak markets. Yet Unilever still managed to drive underlying sales ahead by 2.9 per cent - ahead of the market both in terms of value and volume - and boost profits by taking costs out of the business.

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Growth in emerging markets slowed to 5.7 per cent as economic pressures weighed on consumer demand, particularly in South Africa and Brazil. There was a modest pick up in North America, but overall Unilever's developed markets portfolio reported a 0.8 per cent dip in like-for-like sales. The home, personal care and refreshment categories all reported sales growth, but foods continued to struggle. Unilever reacted by pruning the portfolio, disposing of brands such as Ragu and Bertolli.

Mr Polman said he didn't expect much improvement in market conditions this year. Still, there are some positives: destocking in China is ending, and if current exchange rates are held it would boost the year-on-year comparisons of both sales and EPS. Falling fuel prices will also feed into family budgets and lower raw material prices. As in previous years, further cost-cutting should help.

Berenberg Bank forecasts 6 per cent growth in underlying EPS this year, from 161¢ to 171¢.

UNILEVER (ULVR)
ORD PRICE:2,672pMARKET VALUE:£80bn*
TOUCH:2,671-2,673p12-MONTH HIGH:2,763pLOW: 2,292
DIVIDEND YIELD:3.4%PE RATIO:19
NET ASSET VALUE:455¢**NET DEBT:69%

Year to 31 DecTurnover (€bn)Pre-tax profit (€bn)Earnings per share (¢)Dividend per share (p)
201044.36.115171.2
201146.56.315177.6
201251.36.515478.9
201349.87.117188.9
201448.47.618290.2
% change-3+7+6+1

Ex-div: 5 Feb

Payment: 11 Mar

*Reflects combined value of Unilever NV and Unilever plc

*Includes intangible assets of €22.2bn, or 740¢ a share £1=€1.30