Shares in Unilever tumbled by more than 7% this morning (31 July) despite the company maintaining its full-year guidance, as a strong euro and restructuring charges hit profits.
The Anglo-Dutch consumer goods giant posted a 5% fall in second-quarter operating profit to EUR1.37bn (US$2.14bn) and a 1% dip in sales to EUR10.37bn as the euro ate into earnings.
At constant exchange rates, operating profit was up 3% during the three months to the end of June, while turnover rose 6%.
During the first half of the year, operating profit reached EUR3.18bn, a rise of 16%, helped by disposals in the first quarter. Turnover was down 1% to EUR19.94bn.
Nevertheless, Unilever chief executive Patrick Cescau said the company had put in a “good performance” during the first half, posting underlying sales growth of 7% in a “challenging environment”.
He said: “The changes already implemented in our business have made us nimbler and better able to respond to market conditions. We confirm our outlook for delivering ahead of our 3-5% target range, with an underlying improvement in operating margin.”
The market, however, was unconvinced and Unilever’s shares had fallen 7.02% to GBP14.04 at 10:22 BST this morning.
Underlying sales in Europe rose 2.3% during the first half thanks to higher prices. Sales volumes dipped 2.9% during the second quarter due to weaker ice cream sales, Unilever said. Margins in Europe rose on the back of profits on disposals.
In the Americas, underlying sales rose 5.7% with price increases in the US offsetting lower volumes. Brazil and Mexico boosted sales in Latin America, which rose 11%. Margins dipped 0.6% due to higher commodity costs.
Unilever saw underlying sales from its businesses in Asia and Africa rise 14.7%. The jump came in part through higher prices but volumes also grew, albeit at a slower pace than last year. Margins were up 0.8%.