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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Unilever Nv | LSE:UNV | London | Ordinary Share | NL0000388601 | NLG1.12 |
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0.00 | 0.00% | 0.00 | - |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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RNS No 3727b UNILEVER PLC UNILEVER NV 7th August 1998 UNILEVER RECORDS #1.48 BILLION PRE-TAX PROFIT FOR HALF YEAR SECOND QUARTER HALF YEAR # millions # millions 1998 1997 1998 1997 7,408 7,930 -7% Turnover 14,480 15,109 -4% 7,408 7,281 +2% continuing operations 14,480 13,832 +5% -- 649 -- discontinued operations -- 1,277 -- 689 794 -13% Operating Profit 1,408 1,320 +7% 689 719 -4% continuing operations 1,408 1,156 +22% -- 75 -- discontinued operations -- 164 -- Operating Profit BEI 690 716 -4% continuing operations 1,398 1,219 +15% 722 3,404 -79% Pre-Tax Profit 1,476 3,886 -62% -- 2,658 profit on sale of chemicals -- 2,658 Net Profit 472 2,566 -82% at constant exchange rates 932 2,853 -67% 472 466 +1% excl profit on sale of chemicals 932 753 +24% Net Profit 437 2,513 -83% at current exchange rates 863 2,809 -70% 437 473 -8% excl profit on sale of chemicals 863 769 12% 5.83p 33.61p -83% Earnings per share 11.50p 37.55p -70% per 1.25p ordinary PLC share OUTLOOK FOR 1998: Chairman Niall FitzGerald comments: "Our results, when expressed at current rates of exchange, will continue to be influenced by the economic difficulties in East Asia and the effects elsewhere. However, our underlying business performance continues to be encouraging with good progress in Europe and North America. We remain confident that markets will be attractive enough to enable us to grow and make progress in improving the underlying profitability in 1998." BUSINESS PERFORMANCE FOR THE HALF-YEAR: There has been no significant change in economic conditions in Europe and North America and these economies continue to develop relatively favourably. The difficulties in East Asian economies remain a concern in the medium term and we have also seen signs of economic slowdown in a number of countries in other developing and emerging markets. Our operations, however, remain firmly based and our market positions have improved. Sales and profits were boosted by a half-year which, for reporting purposes, was six days longer than the corresponding period last year; there will be some reversal of this benefit in the second half year. There was also a substantial increase in marketing investments, notably in Europe and North America, which impacted the results in the period. REGIONAL SUMMARY: Europe: sales were 2% lower mainly reflecting the impact of business disposals; underlying volume growth higher than in the same period last year; market shares improved in most priority categories. Margins again improved, notably in foods operations. North America: sales grew by 4% despite disposals; operating profit grew strongly despite higher marketing investments and operating margin improved. Integration of the three mass-market home and personal care businesses is progressing well. Africa & Middle East: sales were up 16% and volume growth was ahead of corresponding period; profits grew strongly. Overall operating margins were well ahead of last year. Asia & Pacific: sales increased 19% mostly due to price increases in South East Asia. Slowdown in consumption, especially in Indonesia and Thailand, reflects deteriorating economic environment. Active cost reduction and product launch programmes maintained; market positions remain strong. Latin America: sales increased 9%, reflecting growth across region and benefits of acquisitions; increased market shares in all priority categories. Strong profit improvement in Brazil and Chile, and significant portfolio changes made in 1997, resulted in good margin growth. NET DEBT & GEARING: Net funds at the half year of #2,986 million are somewhat lower than at end 1997, mainly reflecting seasonally higher outflows on working capital and payment of the final dividend. Net gearing remains zero. Enc: copy of full announcement August 7 1998 Enquiries Telephone: Press Office 0171 822 6805 E-mail: press-office.london@unilever.com Internet: http://www.unilever.com UNILEVER RESULTS Second Quarter and Half Year 1998 The directors of Unilever announce the Group's unaudited consolidated results for the second quarter and half year 1998. HALF YEAR 1998 Financial Results At constant rates of exchange, sales fell by 4% over the corresponding period last year. However, excluding the disposal of Speciality Chemicals, sales in continuing operations rose by 5%. On this basis, operating profit before exceptional items increased by 15%. Exceptional items were positive in the half year, as compared with a charge in 1997, resulting in an operating profit after exceptional items 7% ahead. Excluding the profit on disposal of the chemicals businesses in 1997, profit before tax increased by 20% as a result of the positive swing in interest costs. Net profit increased by 24% reflecting a lower tax rate. At exchange rates current for each period, net profit increased by 12% in sterling and 14% in US dollars, reflecting the relative strength of those currencies, and increased by 22% in guilders. Business Performance There has been no significant change in economic conditions in Europe and North America and these economies continue to develop relatively favourably. The difficulties in East Asian economies remain a concern in the medium term and we have also seen signs of economic slowdown in a number of countries in other developing and emerging markets. Our operations, however, remain firmly based and our market positions have improved. Sales and profits were boosted by a half year which, for reporting purposes, was six days longer than the corresponding period last year; there will be some reversal of this benefit in the second half year. There was also a substantial increase in marketing investments, notably in Europe and North America, which impacted the results in the period. To explain the trends in the business performance, the following commentary on the regions deals with the continuing businesses, and is based on operating profit before exceptional items, at constant rates of exchange. In Europe, sales were 2% lower due to the impact of business disposals and the pruning of non-priority categories. Underlying volume growth was higher than in the same period last year, aided by the successful launch of laundry tablets in a number of markets and continued strong growth in several personal care categories. We also achieved satisfactory volume growth in foods, especially in tea-based beverages, culinary and yellow fats. Market shares improved in most of our priority categories. We continue to benefit from restructuring and, despite substantially higher marketing investments and increased raw material costs, we have again improved margins, most notably in our foods operations. In North America, sales grew by 4% despite disposals. Our foods business had a better sales performance and we achieved good growth in our mass personal care business, especially in hair care following a successful product launch. Despite higher marketing investments operating profit grew strongly; within this, there were good performances in home and personal care, while the results in foods were flat. Overall operating margin has improved over the corresponding period last year. The integration of the Lipton Foods businesses has been completed and the integration of the three mass-market home and personal care businesses is progressing well. In Africa and Middle East, sales were up 16%, with good growth in yellow fats and all home and personal care categories. Volume growth was ahead of the same period last year reflecting the focus on consumer goods categories. Profits grew strongly as a result of good performances in Arabia, Egypt and South Africa and a turnaround in Kenya. Higher commodity prices also boosted sales and profits of our plantations operations. Overall operating margins are well ahead of last year. In Asia & Pacific, sales increased by 19%, mostly due to price increases in a number of East Asian countries. In the course of the half year there has been a slowdown in consumption in this sub-region, especially in Indonesia and Thailand, reflecting the deteriorating economic environment. However, we have maintained an active programme of cost reduction and product launches and our market positions remain strong. Sales and profits in India increased markedly resulting from significant marketing initiatives and shares increased in all categories. Our new national sales organisation in China is developing well, but the benefits, in either sales or profit, are still some way off. In Latin America, the sales increase of 9% reflects good growth across the region, including the benefit of acquisitions, notwithstanding the economic slowdown in Brazil. We achieved good underlying volume growth in our established home and personal care categories and profits were up strongly in personal care and foods, the latter benefiting from the good contribution from Kibon and an improved performance in culinary. We have increased market shares in all priority categories. There was strong profit improvement in Brazil and Chile, and the significant portfolio changes made in 1997 resulted in good margin growth. SECOND QUARTER 1998 At constant rates of exchange, sales decreased by 7% over the corresponding period last year. However, excluding the disposal of Speciality Chemicals, sales in continuing operations rose by 2% and operating profit, both before and after exceptional items fell by 4% as a result of a substantial increase in marketing investment. Profit before tax declined by 3%, excluding the profit on the disposal of the chemicals businesses in the prior year's quarter. The lower tax rate for the period left net profit broadly unchanged. At exchange rates current for each period, net profit decreased by 8% in sterling and 6% in US dollars, reflecting the relative strength of those currencies, and decreased by 1% in guilders. OUTLOOK FOR 1998 Our results, when expressed at current exchange rates, will continue to be influenced by the economic difficulties in East Asia and the effects elsewhere. However, our underlying business performance continues to be encouraging with good progress in Europe and North America. We remain confident that markets will be attractive enough to enable us to grow and make progress in improving the underlying profitability in 1998. Year 2000 The Year 2000 or millennium bug presents a major business challenge, which is extensive because, apart from information systems, the task involves correcting Information Technology infrastructure, factory and process control facilities, and telecommunications networks for both voice and data. The Group is addressing this threat as a critical corporate priority, working both with internal processes and with Unilever's business partners to ensure the smooth functioning of the supply chain. Unilever has been planning for the Year 2000 issue since 1995 and expects that overall compliance within Unilever will mostly be achieved by the end of 1998. Covering Unilever in its broadest scale, in that it operates in over 90 countries, and allowing for contingent costs related to problems associated with customers and suppliers and the ongoing management and remedial work associated with the bug during 1999 and 2000, the estimated total costs of dealing with the millennium bug are about #300 million; this covers costs from when the project started in 1995 through to expected completion in 1999. The relevant costs for each year are charged to operating costs as incurred. European Monetary Union 1998 is a critical year in relation to the European Monetary Union, and with the advent of a single currency on 1 January 1999, there will be a greater price transparency across Europe. The Netherlands is participating; however, for the time being, the United Kingdom is not. One of the consequences is that the Dutch guilder will be replaced by the EURO by 2002; however, earlier adoption is permitted. As a result, Unilever NV will publish supplementary information in EURO's in 1999 and replace the guilder by the EURO as from the year 2000. Unilever will begin to undertake EURO contracts for foreign exchange contracts and deposits from January 1999. Sale of Plant Breeding International As previously announced, Unilever has agreed to sell Plant Breeding International Cambridge Limited (PBIC) to Monsanto Company for #320 million cash. The profit on disposal of this business will be reported in the Q3 results announcement. Balance Sheet and Cash Flow The main movement in the balance sheet at the half year compared to end 1997 is in working capital. This is mainly due to the seasonality of the business. Net funds at the half year of #2,986 million are somewhat lower than end 1997, mainly reflecting higher outflows on working capital and payment of the final dividend. Net gearing remains zero. Total Capital and Reserves increase by #644 million due to profits to the half year, partly offset by currency movements. Cash flow from operating activities at #1,058 million is in line with the same period last year. CONSOLIDATED PROFIT AND LOSS ACCOUNT - CONSTANT EXCHANGE RATES (unaudited) In the profit and loss account given below, the results in both years have been translated at constant exchange rates, being the annual average exchange rates for 1997. This reporting convention facilitates comparisons since the impact of exchange rate fluctuations is eliminated. Second Quarter # millions Half Year 1998 1997 Incr./ 1998 1997 Incr./ (Decr.) (Decr.) 7,408 7,930 (7)% TURNOVER 14,480 15,109 (4)% 7,408 7,281 2 % Continuing operations 14,480 13,832 5 % - 649 - Discontinued operations - 1,277 - 689 794 (13)% OPERATING PROFIT 1,408 1,320 7 % 689 719 (4)% Continuing operations 1,408 1,156 22 % - 75 - Discontinued operations - 164 - 690 716 (4)% Operating Profit BEI - 1,398 1,219 15 % Continuing Operations - 2,658 Profit on sale of chemicals - 2,658 businesses 7 4 Income from fixed investments 12 8 26 (52) Interest (net) 56 (100) 722 3,404 (79)% PROFIT BEFORE TAXATION 1,476 3,886 (62)% (210) (796) Taxation (479) (980) 512 2,608 (80%) PROFIT AFTER TAXATION 997 2,906 (66)% (40) (42) Minority Interests (65) (53) NET PROFIT AT CONSTANT 1997 472 2,566 (82)% EXCHANGE RATES 932 2,853 (67)% 472 466 1 % Net profit - excluding profit 932 753 24 % on sale of Chemicals business 437 2,513 (83)% NET PROFIT AT EXCHANGE RATES 863 2,809 (70)% CURRENT IN EACH PERIOD Net profit - excluding profit 437 473 (8)% on sale of Chemicals business 863 769 12 % COMBINED EARNINGS PER SHARE 5.83p 33.61p (83)% - per 1.25p of ordinary 11.50p 37.55p (70)% capital ADDITIONAL INFORMATION (unaudited) CONSOLIDATED RESULTS BEFORE EXCEPTIONAL ITEMS The undernoted analysis provides supplementary information on the consolidated results for comparative purposes only. The results shown exclude the exceptional items taken in operating profit and the profit on sale of the international speciality chemicals businesses. Second Quarter # millions Half Year At constant exchange rates 1998 1997 Incr. 1998 1997 Incr./ (Decr.) (Decr.) 690 791 (13)% Operating Profit 1,398 1,383 1% 690 716 (4)% Operating Profit - 1,398 1,219 15% Continuing operations* 723 743 (3)% Profit before tax 1,466 1,291 14% (218) (260) Taxation (482) (469) 465 464 - % Net Profit 919 792 16% * Continuing operations excludes the results of the Chemicals businesses sold to Imperial Chemical Industries on 8 July, 1997. CONDENSED BALANCE SHEET (unaudited) # millions As at 4 As at 31 July December 1998 1997 Goodwill 139 - Fixed assets 5,946 6,107 Stocks 3,393 3,111 Debtors 4,751 4,176 Trade & other creditors (5,964) (6,002) 8,265 7,392 Net debt / (funds) (2,986) (3,183) Provisions for liabilities and 2,891 2,847 charges Minority interests 300 312 Capital and reserves 8,060 7,416 8,265 7,392 CASH FLOW STATEMENT (unaudited) Half Year 1998 1997 Cash flow from operating activities 1,058 1,088 Returns on investments and servicing of finance 21 (141) Taxation (334) (290) Capital expenditure and financial investment (426) (407) Acquisitions and disposals (33) 25 Dividends paid on ordinary share capital (466) (394) CASH INFLOW / (OUTFLOW) BEFORE MANAGEMENT (180) (119) OF LIQUID RESOURCES AND FINANCING Management of liquid resources (156) (746) Financing 440 630 INCREASE / (DECREASE) IN CASH IN THE PERIOD 104 (235) GEOGRAPHICAL ANALYSIS Second # millions Half Year Quarter 1998 1997 1998 1997 Turnover 3,498 3,614 Europe 6,652 6,760 1,397 1,406 North America 2,806 2,705 406 366 Africa and Middle East 806 696 1,256 1,077 Asia and Pacific 2,482 2,082 851 818 Latin America 1,734 1,589 7,408 7,281 Sub-total 14,480 13,832 - 649 Discontinued Operations - 1,277 7,408 7,930 TURNOVER 14,480 15,109 % % Operating profit - before exceptional items % % 390 429 Europe 706 692 88 95 North America 193 148 46 33 Africa and Middle East 84 60 96 93 Asia and Pacific * 232 175 70 66 Latin America 183 144 690 716 Sub-total 1,398 1,219 - 75 Discontinued Operations - 164 (1) 3 Exceptional Items 10 (63) 689 794 OPERATING PROFIT 1,408 1,320 % % Operating margin - before % % exceptional items 11.1 11.9 Europe 10.6 10.2 6.3 6.8 North America 6.9 5.5 11.2 9.0 Africa and Middle East 10.4 8.6 7.6 8.6 Asia and Pacific 9.3 8.4 8.3 8.1 Latin America 10.6 9.1 9.3 9.8 Sub-total 9.7 8.8 - 11.6 Discontinued Operations - 12.9 9.3 10.0 OPERATING MARGIN BEI 9.7 9.2 9.3 10.0 OPERATING MARGIN 9.7 8.7 * Note: At current average rates of exchange for the first half year, 1998 operating profit for those countries in South East Asia which have experienced significant currency devaluation, reduces by approximately #52 million. The results for Turkey formerly reported under the Africa and Middle East region are reported within Europe from 1.1.98. Results for 1997 have been restated on the same basis. NOTES Acquisitions and Discontinued Operations In the first half of 1998 the effect on turnover and operating profit of acquisitions made in the period in the continuing business was #41.4 million and #2.9 million respectively. In 1997, the speciality chemicals businesses were discontinued as at the 8th July 1997. There were no discontinued operations in the first half of 1998. Balance Sheet The condensed balance sheet as at 31 December 1997 has been extracted from the full Group Accounts, on which the auditors gave an unqualified opinion, and which have been delivered to the Registrar of Companies. Exchange Rates The results for 1998 and the comparative figures for 1997 have been translated at constant average rates of exchange, being the annual average rates for 1997. For our reporting currencies these were #1 = Fl. 3.18 = US $1.64. In addition, the net profit, earnings per share and cash flow statement have been translated at rates current in each period. For our reporting currencies these were: Second Quarter Half Year 1998 #1 = Fl. 3.33 = US $ 1.65 #1 = Fl. 3.36 = US $ 1.65 1997 #1 = Fl. 3.13 = US $ 1.63 #1 = Fl. 3.09 = US $ 1.63 In order to maintain our constant rate reporting conventions and to ensure that trends in results in sterling, guilders and dollars are identical, the results for the chemicals discontinued operations in first half l997 and the profit on disposal of the chemicals businesses have been restated in all cases at average l997 exchange rates. In l997 the results of the discontinued operations were accounted for at average rates prevailing up to the date of disposal, and the profit on the sale of chemicals was translated at the exchange rates prevailing on 8th July l997. The balance sheet figures have been translated at period-end rates of exchange. For our reporting currencies these were #1 = Fl. 3.38 = US $1.65 at the half year 1998 (31 December 1997: #1 = Fl. 3.34 = US $1.65). Change in Accounting Standards With effect from 1.1.98 the UK Standard FRS 10 on goodwill is being adopted. Goodwill on acquisitions after this date will be capitalised on the Group Balance Sheet and amortised in operating profit over periods of up to 20 years. Previously goodwill was written off to reserves on acquisition. Goodwill will be amortised in results from the quarter following the quarter in which it is acquired. There is no material impact for this change in Q2 1998. Goodwill on acquisitions prior to 1.1.98 will not be capitalised nor will prior year results be restated for this change. Dates The results of the third quarter and announcement of interim dividends for 1998 will be published on Friday 6 November 1998. 7 August 1998 Salient figures for the above results will be published in the Financial Times and Daily Telegraph on Saturday 8 August 1998. Internet: http://www.unilever.com END QRSANOWKWNKWRAR
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