What the analysts say: Unilever's Q4 & full-year
A selection of analyst's thoughts on Unilever's performance
Anglo-Dutch consumer goods giant Unilever this morning (23 January) booked an expectation-beating increase in underlying sales. Net and operating profit were also up, with core operating margin rising to 13.8%. Unilever's food division, however, faced a number of challenges, including "difficult markets". Analysts gave a largely positive view of the results.
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers
"The group's reputation for delivering consistent growth has today received a further boost. A concentration on core brands, product innovation and a drive into the emerging markets are all playing their part. Promotional spending continues to be ramped up, whilst a more recent reduction in group restructuring expenditure has also contributed.
"On the downside, volatile raw material prices and currency movements provide ongoing uncertainties, whilst the group's burgeoning transformation has seen its discount valuation to rivals disappear."
Investec analyst Martin Deboo
"The Q4 & FY12 numbers have beaten consensus expectations on the key metrics of organic growth and core margins (core EPS was in line). This caps a strong year for ULVR and we see the trends as supportive of our Buy case. The offsetting concern is that the margin beat has been delivered on the back of reduced A&P:sales in H2, an issue which has proved troublesome for Unilever in the past.
"Expecting FY13 soft guidance to be closely scrutinised. FY12 has been a strong year, but Unilever’s rating doesn’t allow any room for slips. We think the FY13 margin commentary around input costs, restructuring costs and benefits and A&P investment will be particularly closely scrutinised."
Panmure Gordon analyst Damian McNeela
"Unilever has finished the year strongly, with 7.8% like-for-like sales growth (consensus 6.3%, Panmure 6.8%), nicely balanced between 4.8% volume growth and 2.9% price inflation. Emerging markets remains the driver of growth with 10.8% like-for-like growth, evenly split between volume and price, while developed market growth was 4% - entirely volume driven, and boosted by phasing issues in North America last year.
"With two recent disposals in US foods, we expect Unilever to continue its favourable skew to faster growing categories in 2013E. It is encouraging to see Unilever’s cash flow improving from EUR3.1bn in 2011 to EUR4.3bn, and net debt ended the year at EUR7.4bn, down from EUR8.8bn in 2011. The outlook remains the same; further sales growth ahead of the market and continued steady and sustainable margin expansion. Buy."
Shore Capital analyst Darren Shirley
"Unilever’s has reported Q4 and 2012 results to 31st December above expectations. Unilever’s investment potential remains in its infancy with ongoing sales outperformance to be driven by the structural advantage of its >55% emerging market sales exposure and the systematic implementation of the ‘compass’ which is now embedded within the group’s culture, and with sustained margin expansion to come from the ongoing costs saving programme (+EUR1bn per annum) and the greater rigour and focus being applied to gross margin expansion across all areas of the business, supported by the materially enhanced IT capability."
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