It’s been nearly a year since Kraft Heinz tried to buy Unilever (ULVR), but shares in the consumer goods colossus are drifting around the same level.
Unilever says underlying sales growth rose 3.5% in the last three months of 2017, marking a turnaround from when it failed to beat third quarter expectations in October.
This sales figure excludes the spreads division, which was sold to private equity firm KRR for €6.8bn under Unilever's disposal strategy to drive long-term value.
We believe the market over-reacted to the company’s setback late last year, since when the shares have fallen 7.5%.
Unilever has a well-known portfolio of appealing brands, including Ben & Jerry’s and Flora and offers a decent dividend yield. It is also expected to boost pre-tax profit, which is anticipated to rise from €8,153m to €9,272m this year.
SMASHING EXPECTATIONS OVERSEAS
Investec analyst Eddy Hargreaves is impressed that Unilever beat consensus expectations in the fourth quarter in all geographic regions, notably in the Americas.
In the last three months of 2017, underlying sales growth in the Americas was 3.4%, easily surpassing forecasts of 2.4% thanks to strong volume growth.
Liberum analyst Robert Waldschmidt is more cautious, flagging more subdued growth in developed markets of 0.8% compared to emerging markets growth of 6.3%.
He concedes that Unilever is anticipated to deliver underlying sales growth of between 3% and 5% and improved operating margins and cash this year.
