Consumer goods firm Unilever (ULVR) gains 1.7% to £45.15 as fourth quarter sales growth comes in slightly ahead of expectations.
Underlying sales growth for 2019 as a whole came in at 2.9% but just 1.5% in the fourth quarter, though this was better than the 1.4% growth pencilled in by analysts after a pre-Christmas warning from the group.
The company also announces a strategic review of its tea business, encompassing brands like Lipton and PG Tips, amid dwindling demand for black tea in developed markets.
The outlook for 2020 remains unchanged, with underlying sales growth towards the lower end of the targeted 3% to 5% range. Although this relies on a second half improvement, with growth expected below this level in the first half.
AJ Bell investment director Russ Mould observes: ‘This could be setting itself up for a fall if the anticipated recovery doesn’t come through.
‘The risks of such a disappointment look greater given the escalating coronavirus outbreak in China, whose impact the company admits remains an unknown.’
On the tea review, Mould adds: ‘The decision to launch a strategic review of its tea business reflects an attempt under CEO Alan Jope to reposition the company towards areas of higher potential, after a period in which growth has been harder to come by.’
Liberum says: ‘We are pleased to see some progress on the disposals strategy with Unilever initiating a strategic review of its global tea business.
‘Unilever’s recent investor days highlighted a move away from a dizzying pace of bolt-on deals towards integration, disposals and continuing digital transformation.
‘The market misses that management focus on scaling the brands of tomorrow whilst disposing of slow-growth assets should help Unilever become a mid-single-digit top-line growth company in time.’
