Margins, eh? In these straitened times for UK plc, we seem to be talking about them a lot. Sometimes it is to debate the health of a company’s recovery, like Tesco (TSCO) or Next (NXT). When it comes to Anglo-Dutch consumer goods major Unilever (ULVR), which issued results this week, it is almost an existential matter - proving it can generate better value for shareholders than would-be suitor Kraft Heinz (us:KHZ) could have offered.
Perhaps that’s to overstate the case. But consider the company’s half-year results, published yesterday. Faster-than-expected progress on cost savings meant the company had a good story to tell on its underlying operating margin. Click here for that.
Gross margin can be a pure or misleading measure, depending on the context. For Moneysupermarket.com (MONY), gross margins include online marketing spend. Paid-for search in the first half generated a quarter of its revenue (up five percentage points), which pushed the gross margin down from 76 per cent to 73 per cent. Management said this was partly due to customers increasingly using mobile devices. That trend doesn’t look to be going anywhere, which is bad news for the price comparison company, and not even its biggest problem. Click here for our take on its energy squeeze.
In the event, kitchen specialist Howden Joinery (HWDN) put in a decent performance during its first half, as far as the top line was concerned. But rising distribution and marketing costs meant its operating margin fell from 14.1 per cent to 12 per cent. Click here for our analysis.
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