Brazilian strike and currency fluctuations eat into Unilever’s profits

19 July 2018 - 12:52 Agency Staff

A monitor displays Unilever signage on the floor of the New York Stock Exchange in New York, US, on Friday, February 17 2017. File photo: BLOOMBERG

The Hague — Anglo-Dutch consumer giant Unilever on Thursday revealed a drop in both sales and profits in the first half of 2018, saying markets remained "challenging" amid moves to leave its London base this year.
Sales fell about 5.0% to €26.4bn in the first six months, down from €27.7bn in the year-earlier period.
Net profits also slid by 2.4% to €3.2bn, down from €3.3bn from January to June last year, as the company took a hit from a 11-day truckers strike in Brazil and currency fluctuations.
However, Unilever, which has more than 400 household brands in its portfolio, said the first half showed "a solid, all round performance with some challenging markets".
CEO Paul Polman insisted "our expectation for the full year is unchanged", adding the company believed it would have underlying sales growth in the 3%-5% range" in 2018.

Paul Polman. Picture: SUPPLIED

He also announced that Unilever had completed the sale of its margarines and butters division to US private equity giant KKR by its July 2 deadline, saying in a conference call it was "one of the most involved and complex transactions in Unilever’s history".

The first half of a €6bn buyback scheme also ended on Thursday, with the next €3bn to start on Friday.
Unilever was founded in 1930 after the Dutch margarine producer Margarien Unie merged with British soapmaker Lever Brothers.
Its brands include such household names as yeast extract Marmite, PG Tips tea and Persil washing powder, Knorr soup, Dove beauty products and Magnum ice cream.
Unilever’s shares added 0.3% in morning trading in London, in line with gains on the blue-chip FTSE 100 index.
For more than a century, Unilever has maintained a dual-headed structure, with listings on the London, Amsterdam and New York stock exchanges.
But in March, the company announced it was choosing The Netherlands over London to host its headquarters, dealing a blow to Britain’s efforts to keep multinational companies following Brexit.
"The simplification of our dual-headed structure is an important next step to unlock the flexibility needed for future portfolio change," Polman said.
"It makes us simpler and further strengthens our corporate governance," he said.
The decision followed a failed hostile bid by US rival Kraft Heinz in 2017, which analysts said played a key role in Unilever’s decision as the Netherlands has stronger rules to protect companies against takeovers.
But the move to leave London has left many investors uneasy as the company is likely to be forced to withdraw from the coveted FTSE 100 index.
Chief financial officer Graeme Pitkethly said Unilever bosses had held a series of private meetings with worried shareholders and with FTSE 100 leaders on the issue.
"But it did become very clear that we are extremely unlikely to be included in the index at the moment of unification," he said, confirming he expected the move to quit London to be implemented by the end of December.
Unilever said on Thursday that it would hold a general meeting for shareholders on the issue on October 25 and 26, with documents about its position to be sent out six weeks in advance.
The decision to leave London will need to be approved by a majority of 50%-75% of shareholders, depending on what type of shares they hold.
But Pitkethly said the company was "very confident" the move would be approved. "There’s been really universal support" for the plan, he said.
AFP