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Sales growth accelerated at under-pressure consumer giant Unilever (ULVR), as it was boosted by hot summer weather and recovery in Brazil.
The Hellman’s manufacturer grew underlying sales 3.8% in the third quarter after disruptive strikes in Brazil came to an end.
The results come amid significant pressure on the Unilever board after performing a u-turn on plans to move its headquarters from London to Rotterdam.
After a period of sustained shareholder pressure, the company scrapped the move, delivering a blow to the credibility of top executives, CEO Paul Polman and chairman Marijn Dekkers who lobbied for the relocation.
The producer of Dove soap reported sales of €12.5bn, marginally behind analyst expectations of €12.56bn, in figures which strip out performance in Argentina, where sharp inflation would have skewed organic growth.
Unilever confirmed its annual target to reach 3 to 5 per cent organic growth, a metric that strips out acquisitions and currency movements.
Overall turnover fell 3.3%, resulting from the disposal of Unilever’s spreads, including Flora, to KKR to £6bn in December 2017.
European sales “grew modestly” during the sale, largely driven by ice cream sales boosted by the hot summer in the north of the continent.
In the UK positive growth in the ice cream category was offset by a slump in its ‘fabric solutions’ business, which includes the Comfort and Surf fabric conditioner brands, driven by increased competitive pressures.
“Growth accelerated in the third quarter across all Divisions. We were able to increase prices whilst still maintaining good volume growth which reflects the strength of our brands and quality of our innovation programme,” commented CEO Paul Polman.
“Our focus is building our business for the long-term continues to deliver high quality growth.
“Our innovation pipeline continues to strengthen and in the third quarter alone we have launched four new brands. We have now successfully completed the disposal of our spreads business and continue the acceleration of our efficiency programmes.”
Morning update
FTSE 250 food packaging specialist Hilton Food Group (HFG) has agreed to buy a 50% share in Dutch vegetarian food producer Dalco Food.
Hilton has entered a joint venture agreement with the Oss-based supplier, and has an option to buy the remaining 50% stake in the business in 2024.
The deal will launch Hilton, which also owns seafood processor Seachill, into the fast-growing vegetarian market.
“This agreement represents an exciting opportunity for Hilton to broaden its offering in a growing segment of the market and meet our customers’ demands for Hilton to supply them with a range of innovative, high quality vegetarian products,” commented Hilton CEO Philip Heffer.
“We look forward to seeing the positive effects of our tried and tested business model on this relationship, which will be supported by our flexible and versatile approach to meeting local requirements.”
Dalco CEO Marian Wagemakers said: “We are pleased to have signed this joint venture agreement with Hilton and look forward to the benefits and expertise that this brings to our business and that we can bring to Hilton’s business.
“It will enable us to expand our operations and continue to focus on giving our customers the right choices at competitive prices. I value the mutual respect and cultural similarities which will provide a strong base for a successful joint venture.”
Dalco, which was founded by the Wagemakers family in 1975, develops and supplies vegetarian products to customers worldwide from its two facilities located in the Netherlands.
Hilton had sales of £1.4 billion in 2017 and employs around 4,300 people across its sites.
Elsewhere, the world’s largest consumer group Nestlé announced it was in line with expectations as it reported a 2.8% rise in like-for-like sales for the first nine months of the year.
Net sales rose 1.4% to $22.6bn in the third quarter at the Kit-Kat maker, driven by strong performance in coffee and infant nutrition.
Nestlé confirmed its full year guidance for 2018, stating that organic sales are expected to end the year roughly 3% up.
Net sales in Europe, Middle East and north Africa rose 3.7%, buoyed by strong sales for Purina pet-care and KitKat.
“We are encouraged by the progress on our path of accelerated value creation. The nine-month sales show solid growth across most geographies and product categories,” commented Nestlé CEO Mark Schneider.
As well as announcing its quarterly results, Nestle revealed that Wan Ling Martello, the company’s CEO for Asia, Oceania and Sub-Saharan Africa, will be leaving at the end of the year.
The board of directors has appointed Chris Johnson, currently head of group human resources and business services, to the role when Martello leaves at the turn of the year.
Nestle as also appointed Béatrice Guillaume-Grabisch, currently CEO of Nestlé Germany AG, to succeed Chris Johnson as head of group human resources and business services effective January 1, 2019.
Mark Schneider, CEO, said: “I would like to thank Wan Ling wholeheartedly for all her great achievements.
“Her drive and her enthusiasm for entrepreneurship are a great motivation for all of us. While I regret to see her leave Nestlé, I respect her decision. At the same time, we are excited to announce Chris as her successor.”
The FTSE 100 is edging up this morning, moving up 0.2% to 7,065pts as it countered Wednesday afternoon’s late slump.
Domino’s Pizza Group (DOM) is up 5.5% to 275p after revealing 6% sales growth in the UK over the third quarter.
Unilever has dropped 2.2% in early trading to 3,934p after posting its third quarter results.
Other fallers this morning include Smurfit Kappa Group (SKG), down 1.3% to 2,580p, Fevertree Drinks (FEVR), down 1.3% to 2,846p, and Cranswick (CWK), down 1% to 2,962p.
Early risers include McColl’s (MCLS), up 2.4% to 128.1p, Tate & Lyle (TATE), up 2% to 650.8p, and Hilton Food Group (HFG), up 1.2% to 924.6p.
Yesterday in the city
Brexit deal jitters brought the FTSE 100 back into the red despite a largely positive day, pushing it down 0.1% to 7,054pts.
French consumer giant Danone (BN) saw shares slump 4.3% to E62.2 after Sales growth slowed sharply in the third quarter, after a slump in baby formula sales in China and a consumer boycott in Morocco.
Listed sport nutrition business Science in Sport, made strong gains, jumping 3.5% to 74p, after announcing its launch into the Chinese market.
Other risers yesterday included British American Tobacco (BATS), up 3.4% to 3,284p, AG Barr (BAG), up 2% to 752p, and PayPoint (PAY), up 1.9% to 873p.
Yesterday’s fallers included WH Smith (WHS), down 5% to 1,788p, McBride (MCB), down 4.8% to 128p, McColls (MCLS), down 3.8% to 125p and Carr’s Group (CARR), down 3.8% to 150p.
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