The consumer goods giant reported a 2.5% rise in underlying sales, including the spreads business it sold earlier this month, as it expanded its brands in fast-growing segments such as natural beauty products and healthy foods.
Excluding spreads, underlying sales edged up 2.7%, with volumes up 2.5% and prices up 0.2%, driven by growth in emerging markets. Shares ticked up 0.3% to 4,216 in morning trading.
Unilever, which owns brands such as Marmite, Dove and Magnum, said the truckers’ strike in Brazil reduced underlying sales growth by about 60 basis points (bps) in the first half.
The strike came to an end in late May after 10 days of demonstrations against fuel price hikes got the government to meet their demands.
Currency headwinds also weigh
Foreign exchange headwinds also weighed on the company’s results, with turnover falling 5% to €24.4bn, or down 4.8% to €24.9bn excluding spreads.
The operating margin fell 50bps to 17%, mainly due to the gain on the disposal of the AdeS soy beverage business last year. The underlying operating margin, however, was up 80bps to 18.6% as the company reduced its costs.
Earnings per share edged up 1.6% to €1.11 on a reported basis and jumped 7.8% to €1.22 on an underlying basis.
"Our first half results show solid volume-driven growth across all three divisions, which was achieved despite the effects of an extended truckers' strike in Brazil, one of our biggest markets,” said chief executive Pual Polman.
“Growth was driven by strong innovation and continued expansion in future growth markets.”
Full year guidance unchanged
Polman said the group remains on track for its 2020 goals and its full-year guidance remains unchanged.
For the year, Unilever expects underlying sales growth of 3% to 5%, an improvement in underlying operating margin and strong cash flow.
Unilever said it has returned €3bn of its €6bn share buyback programme, which was announced in April and is expected to be completed by the end of the year.
The company recommended a second-quarter dividend of €0.3872 per share.
“These numbers are a little shy of where some analysts were predicting, but cash flow was good and underlying progress looks solid," said Steve Clayton, manager of the Hargreaves Lansdown Select funds.
"Markets are tougher in the developed world and Unilever cannot afford to let its rate of innovation slip, because consumer tastes are fast evolving."
Unilever's Brexit a 'concern for many UK investors'
In March, Unilever said it had chosen Rotterdam over London for its headquarters, although it insisted it had nothing to do with Brexit.
The company has decided to become one legal entity in the Netherlands in a bid to become "more agile".
"Unilever has a Brexit all of its own underway, with plans to simplify its corporate structure into a single Dutch entity, which are a concern to many UK investors," said Clayton.
"If they press ahead, then Unilever, long one of the major blue chip names in the UK market, will likely be dropped from the FTSE indices."
He said funds that track these indices could be forced to sell the stock, while the business’s visibility in the UK market will be reduced.
Clayton added: "We don’t think the changes, as they currently stand are in the best interests of the company’s UK investor base and we will be urging the group to reconsider its plans.”
Unilever is holding shareholder meetings in October to discuss its plans.
In early afternoon trading in London, Unilever shares were 2.6% higher at 4.312.5p.
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