Unilever, one of the largest consumer products companies in the world, has reported strong margin expansion and an increase in sales momentum throughout its first quarter, which it says underpins confidence in the achievement of full year targets.
Earnings per share grew by 100% as sales of the leading brands accelerated through the quarter giving 3% growth, and 4.6% for the last year. Meanwhile operating margin, driven by gross margin improvement, moved ahead strongly by 250 basis points to 14.9%. Operating profit, before exceptional items and amortisation of goodwill and intangibles (of €344m), increased by 18% to €1.825bn (US$1.638bn).
Net profit for the quarter grew by 94% to €463m. Before exceptional items and goodwill amortisation, net profit was ahead by €242m to €927m, an increase of 35%. In both cases the growth came from increases in underlying profit and lower interest.
Net interest fell by 26% to €320m through a combination of lower rates, the benefits of strong cash flow from operations, and disposal proceeds. EPS grew by 37% primarily reflecting the improvement in underlying profitability, but also some later phasing of marketing activity and costs associated with restructuring. Exceptional items for the Q1 were €197m, including €222m of restructuring and €25m profit on disposals.
N W A FitzGerald, chairman of Unilever NV, said: “We have made a sound start to the year. Continuing expansion in underlying operating margin reflects our determination to grow our business profitably. Our operational plans have addressed the improvement in profitability in key parts of our business such as Laundry, Tea and Ice Cream and a continued focus on extracting value from the tail of our business.
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By GlobalData“In addition we have taken pricing action in countries where there have been substantial devaluations. Together these activities re-inforce our planned delivery of low double digit growth in EPS beia for the year.
“We are confident of delivering our innovation and market place activities for the year, which support this target. In Foods we have a step-up in market initiatives, while in Home and Personal Care we continue with a strong innovation program.
“We foresee leading brands approaching 90% of sales by the end of 2002, up from 84% today.”