Unilever

Unilever

15 May 2018Reading time: 3 minutes
On April 19, Unilever issued an update about the first quarter of this year. During this period, the company suffered from the weak dollar and as a result of the negative exchange rate effect, the revenue plummeted on an annual basis with 5.2% to EUR 12.6 billion. The underlying revenue growth was 3.7%, whereat the growth in emerging markets came out on 5.1%. The underlying revenue growth is in line with the target of Unilever to achieve a growth of 3-5%. Furthermore, Unilever stated that the sustainable brands grew 46% faster than the rest of their activities and by now are taking 70% of the total growth for their account. Last year the company expanded their sustainable brand portfolio with 8 more brands, which gives a total of 26. This portfolio concludes well-known brands such as Dove, Lipton, Dirt is Good, Rexona, Hellmann’s and Knorr.

Unilever expects to finish up the sale of their margarine division halfway this year. By the end of last year the division was sold for more than EUR 6.8 billion to the investment company KKR. A part of this yield will be returned to the shareholders. In May Unilever has started with a share buy-back program with a maximum value of EUR 6 billion. Also the quarterly dividend, which will be paid out in June, is increased with 8% to EUR 0.3872 per stock. It remains to be seen to which extent the share buy-back program will support the stock-price of Unilever.

In May, Unilever had to defend itself during the shareholders meeting. Shareholders are dissatisfied about the proposed reward policy for the board of the company. The annual report of 2017 shows a proposition to increase the fixed wage of CEO Paul Polman with 5% for 2018, while the bonus increase can even be 23%. Eventually the reward for the CEO would increase from EUR 11.3 million to EUR 13.7 million maximally. With this pay raise, Unilever seems to already get in lane for a new CEO. Polman has been working 10 years now for the company and has already said that this could be the right moment to pass on the baton. Polman is expected to retire in the next two years. After 35.81% of the shareholders voted against the new reward policy during the shareholders meeting in London, also 26.94% of the shareholders in Rotterdam voted against the proposition. Despite the resistance a majority of the shareholders eventually agreed with the pay raise.

Since the last all-time low of the stock price at EUR 42.12 (02.03.2018), the price recovered again and is at the moment of writing almost 13% higher at EUR 47.55 (10.05.2018).

The future stock price is subjected to several political, industrial and sector specific, as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

Vontobel products on Unilever are tradable at DEGIRO.


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22/08/2018 05:08:50