Whipsawing volatility in emerging markets (EM) clearly hasn't yet dented consumer demand for Unilever's (ULVR) products. A hot summer in Latin America boosted ice cream sales in the final quarter, which contributed to a 7 per cent increase in underlying EM sales growth for the year, compared with flat developed markets. The strong numbers - particularly from its home care and refreshment divisions - meant the company beat expectations and the market showed its appreciation by pushing the stock up 2 per cent.
But chief executive Paul Polman is conscious of tough times ahead for the global economy and the impact bad news can have on consumer demand. Mr Polman hopes the company's strong innovation pipeline, its 'back to basics' focus on how each of its products are priced in each market and its growing market share in key countries, such as the US, should mean it can keep achieving its 3-5 per cent sales growth target into the current financial year. "Let's be realistic," Mr Polman says, "it is a tough environment, but we are better prepared to deal with that."
Perhaps most impressive was Unilever's performance in China. Mr Polman said a high single-digit growth rate in the country meant the company was taking market share from rivals. Sales through hypermarkets were flat or down, but e-commerce rose 80 per cent in the year, with laundry, oral care and skincare businesses all performing well. A crucial market to watch will be Brazil, despite its deepening economic troubles. Unilever raised prices in the country during the fourth quarter, so strong sales are likely to be the result of a rush on goods before the price hikes kicked in. But management thinks innovations there, such as the launch of Baby Dove, should sustain growth.
Elsewhere, a charge of €86m (£66m) was taken due to investigations by local competition regulators in a variety of markets. Analysts at Investec expect adjusted EPS of 187.5¢ for the 2016 financial year, compared with 182¢ in FY2015.
| UNILEVER (ULVR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,900p | MARKET VALUE: | £87.7bn* | |
| TOUCH: | 2,898p-2,901p | 12-MONTH HIGH: | 3,087p | LOW: 2,450p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 544¢** | NET DEBT: | 72% | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€bn) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 46.5 | 6.3 | 151 | 77.6 |
| 2012 | 51.3 | 6.5 | 154 | 78.9 |
| 2013 | 49.8 | 7.1 | 171 | 88.9 |
| 2014 | 48.4 | 7.6 | 182 | 90.2 |
| 2015 | 53.3 | 7.2 | 173 | 88.5 |
| % change | +10 | -6 | -5 | -2 |
Ex-div: 4 Feb Payment: 9 Mar *Reflects combined value of Unilever NV and Unilever plc **Includes intangible assets of €25bn, or 883¢ a share £1=€1.32 | ||||
