Unilever shares close to all-time high as Q1 revenue and sales beat forecasts
Category: Investments, Shares
As Unilever reports its Q1 trading update Graham Spooner, our investment research analyst, explains what it could mean for investors:
- Unilever said Q1 revenues were up 6.1% whilst sales in emerging markets were ‘particularly impressive’
- Consumer goods manufacturer experienced solid performance in challenging markets and raised dividend as a result
- We recommend Unilever as a ‘buy’ for lower risk investors with a balanced portfolio
In a first quarter trading update released this morning, consumer goods manufacturer Unilever said that revenue over the period increased by 6.1% to €13.3bn, whilst sales on an underlying basis were ahead of forecasts, up by 2.9%. Sales in emerging markets were particularly impressive, up 6.1%, but investors should acknowledge there was slower growth in more mature developed markets of North America and Europe. Nevertheless, the market seems to have been impressed by today’s news with shares up 1.2% in early morning trading, remaining close to an all-time high.
The company, whose 400 brands include many well-known favourites such as Dove, Flora, Ben Jerry's, Knorr and PG Tips, also highlighted today that it remains on track for 3-5% sales growth and expects operating margins to rise by at least 80 basis points. Unilever recognised that it had experienced a solid performance in challenging markets and as a result of this combined with strong cash flow, investors should note the quarterly dividend was increased by 12% to €0.3585.
These results follow recent plans to sell off its spreads business and other changes aimed at improving shareholder returns, prompted by the recent bid approach for the company. We continue to recommend Unilever as a ‘buy’ for lower risk investors with a balanced portfolio. This is a company that is well managed with a diverse portfolio of global brands and a healthy dividend, and all the while continues to see the benefits of its restructuring measures and a recovery in emerging markets.
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