Unilever to buy back €6bn in shares

Firm is set to move main headquarters to the Netherlands

Unilever’s reported turnover fell 5.2 per cent to €12.6 billion in the first quarter, hurt by currency exchange rates. Photograph: Tim Ireland/PA Wire

Unilever’s reported turnover fell 5.2 per cent to €12.6 billion in the first quarter, hurt by currency exchange rates. Photograph: Tim Ireland/PA Wire

 

Unilever, the Anglo-Dutch consumer goods giant, reported first-quarter sales figures that met expectations, helped mainly by increases in the volume of products sold, and maintained its full-year outlook.

The maker of Dove soap and Ben & Jerry’s ice cream also expressed confidence that shareholders would support its decision to change its corporate structure and have its main headquarters in the Netherlands.

Chief financial officer Graeme Pitkethly said that even though a small proportion of UK shareholders might be affected if Unilever shares were no longer in the blue-chip FTSE 100 index, most shareholders understood the reasoning for the decision and were supportive.

Shareholders will vote on the move later this year.

Unilever undertook a deep review of its business and structure last year after fending off an unwanted $143 billion takeover offer from Kraft-Heinz. The decision to sell its struggling spreads business also came from that review.

In light of the proceeds from the sale of spreads to private-equity firm KKR, Unilever on Thursday announced a new share buyback programme, for up to €6 billion worth of stock, to start next month.

Sales growth

It also reported underlying sales growth of 3.4 per cent, meeting an analysts’ consensus supplied by the company.

Excluding the spreads business, underlying sales rose 3.7 per cent. On that basis, analysts were expecting 3.6 per cent.

Almost all of Unilever’s sales growth came from selling more products, with only a 0.1 per cent boost from higher pricing. This may concern the market, as a recent rise in oil prices and costs for transportation could eat into margins if not passed on to customers.

The chief financial officer said the balance of price and volume would improve in the second half of year.

A sharp slowdown in pricing growth in last year’s fourth quarter weighed on Unilever’s shares despite overall sales performance that was its best in six quarters.

Consumer packaged goods companies are all under pressure to boost performance, as sales have slowed due to changing consumer tastes and shopping habits and a slew of upstart rivals.

Reported turnover fell 5.2 per cent to €12.6 billion, hurt by currency exchange rates. Analysts were expecting €12.84 billion.

The company stood by its forecast for 2018 sales growth of 3 to 5 per cent.

Swiss food group Nestlé confirmed its full-year guidance after organic sales growth accelerated to 2.8 per cent in the first quarter of 2018, helped by improving volumes. – Reuters