Unilever

Unilever

14 March 2019Reading time: 3 minutes

Last year Unilever benefited from tropical temperatures in the North-West of Europe. Partly because of that the organic revenue growth over 2018 was 3,1 percent, in which the last year sold margarine division is not included. If this is taking into account, the underlying revenue growth decreases on an annual basis from 3,5 percent to 2,9 percent. The total revenue over last year decreased with 5,1 percent to just below 51 billion euro.

On the other hand, the net profit increased with 51,2 percent to 9,8 billion euro. This was partly due to the last year sold margarine division, which improved earnings per share with 62 percent to 3,50 euro. Unilever has proposed to raise the dividend cash out over 2018 with 11 percent to 1,55 euro per share.

Early 2019 there was a change within the top management of Unilever. The Dutch Paul Polman resigned by the end of December and is replaced on January 1st by the Scottish Alan Jope. Since Polman took office in 2009 the stock price of Unilever has increased with more than 180%, by which the AEX value also increased with more than 100%. In addition, Polman also managed to make the own product range of Unilever more sustainable. Polman will remain connected to Unilever as an advisor until July 2019.

It remains to be seen what Jope’s plans will be for Unilever. After several complains of investors, the food company had to lower the salary of the new CEO. At first the reward for Jope would increase to more than 13 million euro but this is now lowered to a maximum of 11,2 million euro.

Jope already claimed that growth will have the highest priority in the coming period for Unilever. For 2019 the new CEO counts on an underlying revenue growth of 3 to 4 percent. Unilever wants to realize this, amongst other things, by more acquisitions, which also have to contribute to a more sustainable product portfolio.

For example, Unilever took over the Indian Health Food Drinks portfolio early December for 3,3 billion euro from GlaxoSmithKline. The acquisition is partly paid out in cash and partly in stocks from the listed Hindustan Unilever. Health Food Drinks focuses on healthy drinks and achieved a revenue of 550 million euro over 2018. Only a few weeks later Unilever announced the take over De Vegetarische Slager, which focuses on meat substitutes.

By the end of January the acquisition of The Laundress followed, without information about any financial details. This company focuses on selling environment friendly cleaning products within the United States and China. Unilever also took over Graze early February of this year. According to the Financial Times, Unilever would have paid approximately 170 million euro for the British manufacturer of healthy snacks. It remains to be seen which effect these acquisitions will have on the results of Unilever.

The stock price of Unilever has been very volatile, especially the last months, which is partly due to the presented annual results earlier this year. The stock price is now 47,92 euro, which is more than 8 percent higher year on year. It remains to be seen how the stock price will develop when the new CEO will present his plans for the food company. The share now has a profit to earnings ratio of 13,5 with a dividend yield of 3,3 percent.

The future price of the stock is subject 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.

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18/03/2019 15:15:54