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Unilever H1 Profit Climbs, Despite Weak Sales; Sees Volume Growth Ahead


Anglo-Dutch consumer goods giant Unilever plc (UN,UL, ULVR.L) reported Thursday higher profit in its first half with increased disposal gain and margin strength. Meanwhile, turnover declined from last year as all segments and regions were hurt by negative currency impact. Underlying sales growth was 3.7 percent with emerging markets up 6.6 percent. The company also announced dividends.

Looking ahead, Unilever said it expects another year of profitable volume growth ahead of markets, and steady and sustainable core operating margin improvement.

For the first half, pre-tax profit increased 15 percent to 4.22 billion euros from last year's 3.66 billion euros.

Net profit attributable to shareholders' equity of 2.82 billion euros increased 16 percent from 2.43 billion euros a year ago. Half-yearly combined earnings per share was 0.97 euros, 17 percent higher than the previous year's 0.83 euros.

The latest results included pre-tax non-core items of 1.01 billion euros, mainly related to 1.39 billion euros gain on disposal of group companies, partly offset by impairments of 318 million euros. The prior year's results included gain of 193 million euros.

Core profit attributable to shareholders' equity, which excluded items, totaled 2.28 billion euros or 0.78 euros per share, versus 2.24 billion euros or 0.76 euros per share reported a year back.

Operating margin increased to 18.2 percent from 15.3 percent last year, while core operating margin remained at 14 percent.

At current rates, turnover dropped 5.5 percent to 24.10 billion euros from 25.50 billion euros in the prior year with lower results in all segments and regions. On a constant currency basis, turnover grew 3.3 percent.

The company's price increased 1.7 percent and volume grew 1.9 percent in the six months.

In the second quarter, turnover dropped 4.8 percent to 12.70 billion euros from 13.34 billion euros a year ago. Underlying sales growth was 3.8 percent with 1.9 percent rise in each of price and volume.

Unilever noted that market growth continued to slow in emerging countries, particularly in Asia, as macro-economic pressures weighed on consumer spending in its categories. Developed markets remained weak with little sign of any recovery in North America or Europe.

The company said its Boards have declared a quarterly interim dividend for the second quarter of 0.2850 euros per Unilever N.V. ordinary share, and 0.2253 pounds per Unilever Plc ordinary share.

Unilever added that its project Half is on track in a tougher cost environment, and is helping it to drive cost savings and simultaneously increase organisational agility.

Unilever shares were losing 1.67 percent and trading at 31.74 euros in Amsterdam, and were losing 0.50 percent and trading at 2,669 pence in London.

by RTTNews Staff Writer

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