All eyes will be on the next set of results from Unilever (ULVR) after it foiled a $143bn (£111bn) takeover attempt by Kraft Heinz, backed by Warren Buffett and the three Brazilian billionaires at private equity company 3G. At the time of the rejection the Anglo-Dutch group stated that February's $50 a share cash and stock offer, which was pitched at an 18 per cent premium to the consumer goods giant's share price at the time, “fundamentally undervalues Unilever” and that there was no financial or strategic merit to a deal.
Although the attempted takeover fell through, it forced the owner of Dove soap and Magnum ice cream to undergo a strategic review of its operations, which it revealed in April, over how best to create value for shareholders. The measures included a 12 per cent increase to the ordinary dividend, a €5bn (£4.45bn) share buyback, speeding up its “Connected 4 Growth” cost-saving scheme, and targeting a 20 per cent underlying operating margin by 2020. The refreshments and foods businesses were also combined into one as part of an effort to accelerate the margin progression and the spreads business was put up for sale.
The trading statement released later on in April was also encouraging. Revenue was up 6.1 per cent during the quarter to €13.3bn, €7.8bn of which came from home and personal care, with the remaining €5.5bn from food and refreshments. Underlying sales growth came in at 2.9 per cent, but excluding spreads this was 3.4 per cent. Chief executive Paul Polman assured investors that the consumer goods giant is on track for a year of underlying sales growth of between three and five per cent, which he deemed to be ahead of markets, and an 80 basis point improvement to the underlying operating margin.
