Belfast Telegraph

Unilever profits rise 27% despite 'volatile' trading environment

Marmite and Pot Noodle-maker Unilever has boosted half-year sales and profits despite "volatile" market conditions.

The consumer goods giant said pre-tax profits climbed 27% to 4.6 billion euros (£4.1 billion) for the first half of 2017, up from £3.6 billion euros (£3.2 billion) the year before.

Underlying sales growth rose 3% over the period, with sales - excluding its spreads business - expanding by 3.4%.

Shares were up nearly 1% as the FTSE 100 firm said it was on track for another year of underlying sales growth ahead of expectations at around 3% to 5%.

Chief executive Paul Polman said the market "remained challenging", but efforts to boost profitability were gathering pace.

He said: "Our first half results show continued growth well ahead of our markets and a substantial step-up in profitability despite the persisting volatile global trading environment.

"The transformation of Unilever into a more resilient, more competitive and more profitable business is accelerating."

The Anglo-Dutch firm flagged Brazil's economic troubles as a "significant headwind", while the rollout of a goods and services tax in India and fewer trading days due to holidays in Indonesia were also dragging on business.

Consumer demand across Europe was "weak", the company added, with a slowdown in the margarine market across the UK and Germany knocking overall growth.

It said the decline of the spreads business had slowed to 3.7%, with growth in emerging markets offsetting sluggish demand in developed countries.

Unilever, which employs 169,000 people worldwide, announced in April that it would offload some of its best-known brands - including Flora and Stork - after fending off a 143 billion US dollar (£115 billion) takeover attempt from Kraft Heinz.

It plans to sell or de-merge its underperforming spreads business, which could yield up to £6 billion.

Household giant Reckitt Benckiser confirmed on Wednesday that it had secured a 4.2 billion US dollar (£3.2 billion) deal to sell food brands including French's Mustard and Frank's hot sauces to US group McCormick.

Steve Clayton, fund manager at Hargreaves Lansdown, said: "Volume growth is still hard to come by in today's world of lacklustre economic growth, but Unilever's strength in emerging markets is allowing it to push revenues forward through pricing gains.

"Overall, these numbers look to be ahead of where analysts thought the group would be due to strong margin expansion.

"Three percent underlying sales growth in the first half should pick up further in the second half as the results of recent acquisitions kick in.

"Meanwhile, after coming under intense pressure following the Kraft Heinz bid approach, Unilever's redoubled efforts to raise margins are paying off.

"Cost savings of over a billion euros were achieved in the half year, with another five billion euros planned in the medium term. Unilever look well set to hit their target of a 20% margin by 2020."