Unilever 1st qtr trading statement

A manufacturer and supplier of fast moving consumer goods, with more than 400 brands focused on health and wellbeing, 14 of which generate sales in excess of €1 billion a year. I have a holding in my income portfolio (epic code: ULVR).

Unilever announced their first quarter trading statement today showing turnover having decreased -6.3% to €11.4bn that reflected a negative currency impact of -8.9%.

Eliminating the effect of currency, acquisitions and disposals underlying sales growth was +3.6% with underlying volume growth contributing +1.9% and pricing +1.6%.  As a comparison Proctor & Gamble had underlying sales growth of 3% for their 3rd quarter to 31 March announced yesterday. 

Emerging markets were up +6.6% with Latin America particularly strong at +9.8%.  Although comparison with previous years' Quarter 1, underline the headwinds in developing markets:

 

Underlying sales growth by major geographic areas were:

Asia/AMET/RUB +5.8% 

The Americas +3.7%

Europe +0.1%

There was a decline in North American sales due to the timing of Easter, the decline of the margarine market and weak sales in dressings.  Management have stated that they are undertaking a strategic review of their North America pasta sauces business and the Slim.Fast brand, so we may expect further divestments and it is likely that these brands may attract a price close to €1.45bn ($2bn) 

Underlying sales growth by product categories were:

Personal Care +4.5%

Foods -1.7%

Home Care +7.4%

Refreshment +5.9%

Home Care had a strong performance due to new product launches and management state that the decline in Foods was largely explained by the later timing of Easter in 2014.

These results were much as expected following Polman's comments at the time of the prelims:

"...Looking forward, we anticipate ongoing volatility in the external environment and are positioning Unilever accordingly..."  and "...Slow market growth expected to continue in 1st Half..." followed by "...late Easter will shift volume from Q1 to Q2..."  
So a solid looking performance against a background of reduced levels of growth from emerging markets and the quarterly dividend has been increased by +6% to €0.285, but of course with the strength of sterling this translates to just a +2.1% increase to 23.38p.