Unilever reports rising sales and boosts dividend

[THE HAGUE] Anglo-Dutch food and consumer products giant Unilever on Thursday reported rising sales and boosted its shareholder dividend in its first earnings update since seeing off a takeover bid by Kraft Heinz.

Sales rose 6.1 per cent in the three months to March to 13.3 billion euros (S$20 billion), partly explained by favourable exchange rate factors, and ahead of analysts' expectations.

Ever since spurning a takeover bid from US rival in February, Unilever has been trying to prove to shareholders that it is better off on its own.

Earlier this month, it announced the sale of its margarine division to butter up investors, many of whom had voiced concern over the rejection of the proposed tie-up with Kraft.

On Thursday, it announced a 12 per cent hike in its dividend for the quarter, "reflecting the confidence in our outlook", according to its statement.

It had already flagged a share buyback to the tune of five billion euros, a strategy of ploughing cash back to shareholders.

Unilever also predicted improving profit margins for the rest of the year.

Markets reacted favourably and Unilever's share price rose by 1.3 per cent to 48.35 euros in mid-morning trade on Thursday.

In the first quarter, Unilever said its sales grew faster than its markets, and that its strategy over the past months had made the company "more agile and closer to the local markets, unlocking both further growth and margin".

Analysts have called the Kraft Heinz bid a "massive wake-up call" for the company.

Unilever snubbed Kraft's offer which would have valued it at a whopping US$143 billion, saying it "fundamentally undervalued" the group.

Global food companies have been struggling with anaemic economic growth in many key markets amid changing and health-conscious lifestyles.

But the Rotterdam-based group said sales were boosted both in personal care as well as in refreshments.

In skin care, Unilever has rolled out Baby Dove in the US and Britain and a new range of Signal toothpaste in France, it said.

Growth in ice cream sales were boosted by new innovations such as the new Magnum pint, described by Unilever as "the ultimate chocolate and ice cream experience in a tub".

Unilever, which employs some 173,000 people around the world, owns more than 400 brands including Dove, Knorr soups, Lipton, Magnum and Marmite.

AFP