Filed Under: ,
Tickers in this Article: UL
Unilever PLC (UL) posted healthy first half and second quarter 2012 results. The company recorded underlying sales growth (excluding the impact of acquisitions and disposals) of 5.8% in the second quarter. The increase was driven by both volume gains and increased investment in innovation and brand building. Emerging markets underlying sales expanded 11.0% in second quarter 2012.

First Half Results

In the first half of 2012, the company witnessed underlying sales growth of 7.0% driven by both pricing and volume gains. The revenue growth comprised pricing and volume gains of 4.1% and 2.8%, respectively.

Gross margin slipped by 40 basis points in the first half of 2012. Further, higher expense on advertising and promotions led to the 10 basis points rise in Selling, General and Administrative Expenses (SG&A).

Operating margin remained flat during the period as increase in top line was offset by increase in expenses. Core earnings per share went up by 6% in the first half of 2012 due to strong performance of all its brands.

During second half of 2012, underlying sales growth in Asia was 11.0%, 7.7% in Americas and 1.1% in Europe in the second quarter of 2012.

Segment Details

Personal Care: The segment delivered underlying sales growth of 10.4% in the second quarter, driven by volume gains of 7.2% and improved pricing of 3.0%.

During the first half of 2012, the segment delivered underlying sales growth of 10.4% on the back of volume gains of 6.7% and 3.5% on net pricing.

During the first half of 2012, the introduction of Simple brand in the US boosted the first half performance of Skin cleansing. Dove bars were introduced in Indonesia, while Lifebuoy Clini-care made a good start in India.

The Hair section was positively driven by rollout of its brands in new markets. Tresemmé was a success in Brazil, while Clear grew across the markets in United States. Axe hair rolled out across Europe, while Dove Damage Therapy continued to boost sales in the first half of 2012.

Deodorants performed well driven by Dove's healthy performance, which in turn was boosted by innovations and aggressive advertising. Oral growth was driven by the recent introduction of Signal Sensitive Expert in France.

Home Care: The segment delivered underlying sales growth of 9.6% in the quarter, contributed by volume growth of 5.9% and improved pricing of 3.5%.

During the first half of 2012, the segment delivered underlying sales growth of 9.8% on the back of volume gains of 5.3% and pricing benefit of 4.3%.

The segment's laundry division benefited from the launch of Comfort Anti-Bacterial in the Indonesia and Vietnam. Strong performance of Sunlight dish wash  boosted sales in the Household care division.

Foods: The segment delivered underlying sales growth of 0.6% in the quarter, contributed by volume growth of 3.1% partially offset by a negative impact of 2.4% due to pricing.

During the first half of 2012, the segment delivered underlying sales growth of 3.2% contributed by volume growth of 4.2%, partially offset by a negative impact of 1.0% due to pricing

During the first half of 2012, spreads and dressings did well in the quarter. Products like Latta, which were successful in other markets, were introduced in Netherlands. Liquid margarine continued to boost sales in Europe. Hellmann's brand delivered strong performance in Latin America, driven by several promotional campaigns of the company.

Refreshments:  The segment delivered underlying sales growth of 3.2% in the quarter, contributed by volume growth of 4.7%, partially offset by a negative impact of 1.4% due to pricing.

During the first half of 2012, the segment delivered underlying sales growth of 4.9% on the back of volume gains of 0.3% and pricing benefit of 4.5%.

The category was benefited by growth in ice cream, which driven by the launch of Magnum Minis, and with the recent launch of Magnum in the Philippines and Thailand. Beverages category experienced strong performance in Africa and Middle East. Situation in Russia improved on the back of re-launch of Lipton and the good start made by Lipton tea and Honey powdered ready to drink tea.

Currently, we have a Neutral recommendation on Unilever. The stock carries a Zacks #3 Rank in the near term (Hold rating).

comments powered by Disqus

Trading Center