February 1, 2018 / 9:14 AM / 23 days ago

Unilever ends tough 2017 on strong note

LONDON (Reuters) - Unilever reported a bigger-than-expected acceleration in fourth-quarter sales growth on Thursday, helped by a stronger performance in emerging markets that saw the consumer goods maker end its tumultuous year on a higher note.

The maker of Dove soap and Ben & Jerry’s ice cream - which spent most of last year reviewing its business after rebuffing a $143 billion takeover bid in February - said underlying sales rose 4 percent. Analysts on average were expecting 3.7 percent, according to a company-supplied consensus.

That marks an improvement from 3 percent in the first half and 2.6 percent in the third quarter.

Since the failed takeover bid by Kraft-Heinz, Unilever has bought back shares, committed to a margin target, struck a deal to sell its shrinking margarine and spreads business and announced that it wants to collapse its dual-headed Anglo-Dutch structure.

In November, it said it favoured a single structure but was delaying a decision on where it would be based, in part due to heightened political sensitivity over Brexit.

On Thursday, Chief Executive Officer Paul Polman said an announcement on the dual-headed structure would come shortly.

VOLUME IMPROVEMENT

Unilever sold 3.2 percent more products in the fourth quarter, a big improvement from only 0.2 percent in the third quarter. That was helped by the launch of six new brands last year, including a new line of personal care products called Love Beauty and Planet.

Emerging markets such as Brazil and India also showed signs of improving, he said, predicting that the improved volume momentum would continue in the current year.

Underlying earnings per share for 2017 were 2.24 euros, above analysts expectations for 2.21 euros per share.

Analysts at RBC Capital markets called the performance “much improved” and said it went “some way to making up for the third quarter’s disappointing performance” but they are still concerned about the sustainability of Unilever’s mid-term targets, made under pressure in the wake of the failed bid.

“It doesn’t alter our longer term concerns that Unilever might have over-reached itself with its ambitious 20 percent margin target combined with commitment to 3 to 5 percent sales growth,” RBC said.

Looking ahead, the company forecast underlying sales growth of 3 to 5 percent for 2018 and an improvement in underlying operating margin and cash flow that will keep it on track for its 2020 targets.

Unilever shares were roughly flat in early trading.

Reporting by Martinne Geller; Editing by Adrian Croft

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