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€1.5bn (£1.17bn) might seem a lot of money, but it wasn't enough to satisfy investors' appetite when it came to Unilever's share buy-back. Some analysts were expecting a share repurchase programme of up to €2bn. Still, there was much to cheer about on the progress being made in the business.
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Underlying revenues grew by 5.5 per cent last year, ahead of Unilever's 3-5 per cent target, driven by higher volumes and price increases, which also helped to fend off soft commodity inflation. This sales momentum was well-spread across regions and product categories as a result of product innovation, notably the roll-out of Dove Pro Age shampoos. A focus on healthier products, such as Hellmann's extra light mayonnaise, also helped. However, Unilever reported a slowdown in sales of home and personal care products in the US.
Operating profit was down 3 per cent to €5.24bn, but this reflected higher restructuring charges and a reduction in pension gains. The Anglo-Dutch giant is progressing well in its reorganisation, having moved some of its South American operations into a single head office.
Broker Numis Securities forecasts a 2008 full-year EPS of 148¢ (from 140¢), rising to 167¢ in 2009.
Unilever (ULVR) |
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|---|---|---|---|---|
| ORD PRICE: | 1,611p | MARKET VALUE**: | £46.5bn | |
| TOUCH: | 1,611-1,612p | 12-MONTH HIGH: | 1,926p | LOW: 1,334p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 16 | |
| NET ASSET VALUE*: | 429 cents | NET DEBT: | 65% | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€bn) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2003 | 42.7 | 4.54 | 94 | 40.22 |
| 2004 | 38.8 | 3.70 | 94 | 42.67 |
| 2005 | 38.4 | 4.52 | 107 | 45.13 |
| 2006 | 39.6 | 4.83 | 119 | 47.66 |
| 2007 | 40.2 | 5.18 | 132 | 51.11 |
| % change | +1 | +7 | +11 | +7 |
Ex-div:21 May Payment:19 Jun *Includes intangible assets of €16.7bn, or 578¢ a share **Market value of Unilever Plc and Nv £1=€1.34 |
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The group restructuring is starting to deliver and there is still some upside on that front as Unilever plans to sell its US laundry business. The share buy-back programme might be lower than market expectations, but it leaves room for bolt-on acquisitions, similar to the recently acquired Inmarko Russian ice cream business. Good value.
Last IC view: Good value, 3 Aug 2007, at 1559p
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-IC-2.1.3g-prod - 17/03/2010 18:13:09 - ben.wheeler
