Unilever Posts Stronger 1Q Underlying Sales--Update

By Saabira Chaudhuri

Unilever PLC reported a rise in underlying sales for the first quarter as it raised prices, but results were weighed down by a weak performance in developed markets like Europe and the U.S.

The Anglo-Dutch consumer-goods group, whose brands include Dove soap and Ben and Jerry's ice cream, reported a rise in revenue to 13.3 billion euros ($14.3 billion) for the quarter up from EUR12.5 billion a year earlier.

Underlying sales-- which strip out the impact of gyrations in foreign-exchange rates--grew 2.9%, beating analyst estimates for growth of 2%.

Underlying sales in emerging markets increased 6.1% in the first quarter, but were down from the 8.3% growth Unilever reported a year earlier. In developed markets, sales declined by 1.5%, a deceleration from the 0.3% decline a year ago.

Unilever blamed weaker market growth in North America while in Europe it said consumer demand was weak and the retail environment challenging.

The results come as Nestlé SA said first-quarter revenue grew 2.3% on an organic basis-which strips out currencies and acquisitions-but was roughly flat from a year earlier. The company is also struggling with sluggish consumer demand in North America where it said confectionery and pet-care sales declined.

Both Unilever and Nestle are battling a difficult environment in Brazil where consumers have been trading down to cheaper brands.

Liberum analyst Robert Waldschmidt earlier this month said he expects European consumer goods companies in the first quarter to report their lowest level of growth since the recession amid poor consumer demand, geopolitical turmoil and deflationary trends.

Unilever recently announced plans to sell or demerge its spreads division, combine its foods and refreshments business units and improve shareholder returns with a higher dividend and share-buyback program. The revamp, the result of a strategic review, came as Chief Executive Paul Polman looks to appease investors after rejecting a $143 billion takeover offer from Kraft Heinz Co.

Investors have for years called for the sale of spreads, which has steadily declined as consumers eat less bread and, when they do, increasingly opt for butter.

Thursday, Unilever disclosed standalone results from its spreads business for the first time, saying that underlying sales growth would have risen by 3.4% without the drag from the business, which includes products such as margarine, but not condiments like mayonnaise. Analysts have estimated the unit could fetch EUR7 billion to EUR8 billion if put on sale.

Unilever reported flat first-quarter sales in its foods division, including spreads, and 5.4% growth in refreshments, which includes tea and ice cream.

In personal care, Unilever reported a 3.1% rise in underlying sales while in home care sales rose 4.1%.

-Write to Saabira Chaudhuri at [e-mail]

(END) Dow Jones Newswires

April 20, 2017 03:01 ET (07:01 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.