Unilever confident about annual targets after 1st quarter sales hike

On Thursday, Anglo-Dutch agri-food and cosmetics giant Unilever has published the 1st quarter revenue result, up 6.1% within a market environment defined as "challenging", and has reiterated its confidence about reaching its annual targets.

In the first three months of the year, Unilever generated a revenue of €13.3 billion, soaring above the analysts' forecasts compiled by Bloomberg thanks notably to positive exchange rate effects.

Unilever confirmed a 12% increase in its quarterly dividend, to €0.3585 per share, part of the strategy announced in early April after the group rejected the overtures of its US rival Kraft Heinz.

Unilever also confirmed its intention of parting with the margarine division, which is to be "sold or split up" in order to reward shareholders, as the group undertook to do after rejecting Kraft Heinz's acquisition offer, which valued Unilever at $143 billion.

Minus the margarine division, which includes the Flora, Blue Band and Rama brands, the group's 1st quarter revenue was €12.6 billion.

In February, the Anglo-Dutch group, which sells among others Lipton teas, Persil detergents and Rexona deodorants, deemed Kraft's proposal to merge and create a world consumer goods leviathan as being weak and devoid of strategic interest.

In like-for-like terms and at constant exchange rates, Unilever sales rose by 2.9%, buttressed by a 3% price rise, while volumes were slightly weaker at -0.1%.

For the whole year, the group is still forecasting a revenue rise between 3% and 5%, and an 80 base points improvement in its operating margin, which is expected to reach 17.2%.

Unilever is also planning to group together its food and refreshments divisions into one single business unit based in the Netherlands. The new division will be "leaner and more targeted", and will strive to achieve a 20% operating margin by 2020, compared to 16.4% in 2016.

The group's Executive Director, Paul Polman, has also underlined that the cost-reduction programme labelled 'Connected for Growth', introduced in autumn 2016, "is beginning to bear fruit."

In early April, the forecast for the cost reductions the programme is expected to generate by 2020 was raised from €4 billion to €6 billion.