Join our community of smart investors

Unilever misses sales growth expectations

The consumer goods giant missed sales growth expectations, but has stuck to its growth and margin targets for future years
Unilever misses sales growth expectations

Unilever (ULVR) chief executive Alan Jope is feeling the heat, as the consumer goods giant missed sales growth expectations in the first set of half-year results under his leadership. Second-quarter comparators were distorted due to the effects of a Brazilian truckers' strike in 2018, while turnover was constrained due to the strategic sale of the group's spreads business. On an underlying basis, Unilever reported sales growth of 3.5 per cent – comprising 1.2 per cent from increased volumes and 2.1 per cent from price adjustments – although this fell short of consensus expectations by 20 basis points. 

IC TIP: Hold at 4939p

Mr Jope takes over from Paul Polman, whose tenure as chief executive ended with last year’s unsuccessful attempt to ditch London as a dual locale for Unilever’s headquarters in favour of the Netherlands after it was met by a shareholder backlash.

Attempts are still being made to streamline the business and Mr Jope has reiterated Mr Polman’s multi-year organic sales growth target of between 3 and 5 per cent, although this is expected to be at the lower end of guidance for the current financial year. Mr Jope is also committed to reaching the 20 per cent operating margin target by 2020. This, alongside the organic sales growth targets, was set in 2017 following a thwarted takeover attempt by Kraft Heinz.

The homecare division delivered the fastest rate of sales growth at 7.4 per cent to €5.4bn (£4.76bn), compared with 3.3 per cent growth in beauty and personal care to €10.7bn and a 1.3 per cent improvement in food and refreshment to €10bn. 

Analysts at UBS expect EPS of 252¢ during the year to December 2019, increasing to 270¢ in 2020.

UNILEVER (ULVR)   
ORD PRICE:4,939pMARKET VALUE:£131bn*
TOUCH:4,938-4,939p12-MONTH HIGH:5,122pLOW: 3,905p
DIVIDEND YIELD:2.5%PE RATIO:16
NET ASSET VALUE:494¢**NET DEBT:181%
Half-year to 30 JunTurnover (€bn)Pre-tax profit (€bn)Earnings per share (¢)Dividend per share (p)
201826.44.3311167.76
201926.14.3511570.92
% change-1+1+4+5
Ex-div:08 Aug†   
Payment:11 Sep†   

*Reflects combined value of Unilever NV and Unilever plc
**Includes intangible assets of €30.2bn or 1,115¢ a share
† Applies to fourth quarter dividend only. £1=€1.12