Consumer goods firm Unilever (ULVR) managed a pretty stunning rise up 7.9% to £46.73 - a huge move for a £122.2 billion company - despite recording a drop in sales in the first half of 2020.
The reason for the strength in the shares is that the rate of sales decline is much smaller than had been penciled in by analysts - just 0.3% compared with the 7.4% fall expected by consensus.
The company also announced that sales in developed markets grew 2.4% during the period.
Following a strategic review of its tea business, Unilever announced it will retain the tea businesses in India and Indonesia and the partnership interests in the ready-to-drink tea joint ventures.
Underlying operating profit excluding currency increased 3.8%, before a negative impact of 3.2% from currency.
RESILIENCE DEMONSTRATED
Chief executive Alan Jope said: 'We have demonstrated the resilience of the business - in our portfolio, in a continued step-up in operational excellence, and in our financial position - and we have unlocked new levels of agility in responding to unprecedented fluctuations in demand.’
Liberum commented: ‘Amidst a challenging trading environment, Unilever exceeded the highest analyst estimate on both the top and bottom line.
‘Underlying sales growth declined 0.3% in 2Q while underlying earnings per share grew 6.4% in H1. H1 underlying EPS beat expectations by 13.4%.
‘Free cash flow delivered, growing 85% in the half. While parts of the portfolio proved resilient like household care, cleansing, and in-home products, it could not offset the challenges from discretionary-linked out-of-home segments like ice cream, food service and prestige beauty.
‘Some key needle movers include North America growing 9.5% in the quarter and more favourable marketing rates.’
