Unilever Profit Up 2% in First Half of Year --Update

By Saabira Chaudhuri 

LONDON-- Unilever PLC Thursday said its profit rose 2% for the first half of the year, even as revenue slipped on currency volatility, as the consumer goods giant's focus on controlling costs paid off.

The maker of Magnum ice cream, Dove soap and Axe deodorant posted a first-half net profit of EUR2.51 billion ($2.77 billion), up from the EUR2.49 billion in the corresponding period a year earlier, while revenue fell 2.6% to EUR26.3 billion as a result of unfavorable currency movements.

The Anglo-Dutch consumer goods company has been working to mitigate the impact of a turbulent macroeconomic environment by raising prices and releasing premium versions of its products. The company has also adopted so-called "zero-base budgeting" or justifying each year's expenses from scratch to rein in costs.

Underlying sales--which strip out the impact of acquisitions, disposals and currency movements--grew 4.7%, which was better than the 2.9% that Unilever logged for the same period last year. Diluted per-share earnings rose 1% to EUR0.88. After stripping out one-time items and currency movements, per-share earnings rose by 1.3% to EUR0.92.

The results show that Unilever continues to struggle with a soft environment in both North America and Europe, as well as in its spreads business, although the company is benefiting from its slant toward emerging markets.

Sales in emerging markets, where Unilever does the majority of its business, grew 8% on an underlying basis, up from the 6% growth the company reported last year.

In North America, Unilever's sales edged up 0.7% on an underlying basis, while in Europe sales climbed just 0.1%.

Chief Executive Paul Polman said he sees no sign of improvement in the global economy, but underscored that Unilever's long-term focus had helped it withstand a period of "high volatility and accelerating change."

The personal care arm--Unilever's largest--saw sales growth of 5.7% on an underlying basis, amid increases in both volume and price. Volumes in the food business declined but Unilever offset those by raising prices, translating into underlying sales growth of 2.3%. Homecare and refreshment--which includes tea and ice cream--reported underlying sales growth of 6.5% and 4.1%, respectively.

Overall, Unilever has been taking incremental steps to shift its product portfolio away from slower-growing food sales and toward higher-margin personal care products and last year reclassified on the S&P and MSCI indexes from packaged food to personal products.

On Wednesday, the company said it had agreed to buy subscription razor company Dollar Shave Club, giving it a foothold in the U.S. market for razors as well as access to more customer data. That deal, for a reported $1 billion, is expected to close in the third quarter.

Write to Saabira Chaudhuri at [e-mail]

(END) Dow Jones Newswires

July 21, 2016 03:10 ET (07:10 GMT)

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