Unilever share price soars as sales rise 12%

By Joyeeta Basu contact

- Last updated on GMT

 The company said it will shift to more premium products to remain competitive in 2015.
The company said it will shift to more premium products to remain competitive in 2015.

Related tags: Stock market, Chief executive

Unilever share prices surged more than 4% within a few hours of the company announcing that its first quarter sales had risen 12.3% to €12.8bn, exceeding expectations.

Unilever’s share price jumped 4.19% to 3,059p while the blue-chip FTSE 100 index was 0.33% down.

The company's first quarter growth was backed by good underlying sales and favourable currency movements, the company said.

Overall underlying sales rose 2.8% with the first quarter turnover in Europe up 0.7% to €3.1bn backed by volumes. However sales fell 0.4% in the region due to price deflation, it said.

Emerging markets -- approaching 60% of sales –saw underlying sales up 5.4%, driven mainly by price rises. There was improvement in India, more stable conditions in China but decline in Russia and Brazil.

Growth in the Americas (up 4.9%) also remained strong as volumes remained stable though lower consumer confidence impacted demand, it added. 

Chief executive Paul Polman, who had warned in January​ that market conditions were not expected to improve this year, said that despite a challenging trading environment, the company had a good start to the year.

We have had a good start to the year, helped by favourable currency movements but also an improvement in underlying sales.Our priorities continue to be volume growth ahead of our markets, steady improvement in core operating margin and strong cash flow​,” said chief executive Paul Polman.

Despite high levels of currency and commodity volatility, we are now starting to see more tailwinds than headwinds in our markets, and expect our initiatives to deliver a further improvement in volume growth in the remainder of the year.​”

The Anglo-Dutch food and consumer packaged goods giant said it would continue to shift to more premium products to remain competitive in 2015.

High volumes in Europe

Volumes picked up strongly but broad-based price deflation continued across its European markets. Leaf tea, laundry and savoury had a good start to the year while competitive intensity remained high in personal care and falling butter prices weighed on the sales of spreads, it said.

It has been an encouraging start to the year in Central and Eastern Europe,​”said the company

Focus on core brands

Unilever said it would continue to focus on core brands to drive growth. “We are increasing investment behind the core of our brands, as well as extending into premium segments and new markets. We continuously strengthen our go-to-market capabilities and sharpen our execution,​” said Polman.

In line with their growth intentions the company has recently been offloading parts of its business that do not fit in with its long-term plans. Last year it sold its meat snacks business​ including Peperami (sold in UK and Ireland) and Bifi brand (sold in Germany, Benelux, Austria and Switzerland) to Jack Link.

In May, its North American pasta sauces business​ under the Ragu and Bertolli brands was bought by Mizkan Group for $2.15bn. It had also started a standalone business unit for its North American and European spreads​ (leading brands include Flora, Becel and Rama). This was to counter tough markets as spreads had become a drag on the business, with sales falling 3.2% in the first nine months of 2014, and falling 3.1% in 2013.

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