Unilever powers ahead despite recession

Consumers may be tightening their belts but they still seem to be buying the gazillions of goods produced by Unilever, if the Anglo-Dutch firm's second quarter figures are anything to go by.

Turnover in the three months to the end of June rose to €13.3bn from €11.9bn the year before, which equates to underlying sales growth (USG) of 5.8% year-on-year. Although most of this growth was down to price increases - underlying price growth was 3.5% - the group also saw a creditable 2.2% underlying increase in volumes.

Half year figuresFor the first half of 2012, turnover came in at €25.4bn, giving USG of 7.0%, underlying volumes growth of 2.8% and underlying price growth of 4.1%.

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Profit before tax edged up to €3,272m from €3,230m in the first half of 2011, but was flat on a constant exchange rate basis.

Core operating profit of €3,429m was up 4% (+2% using constant exchange rates) on the €3,308m seen in the first half of 2011, and was ahead of market forecasts of €3,386m.

Diluted earnings per share dipped to €0.75 from €0.77 at the half-year stage last year.

Focus on second quarterThe Personal Care division just pipped the Home Care unit for best performer in the second quarter, with the former seeing underlying sales growth of 10.4% to €8.7bn and the latter USG of 9.8% to €4.4bn.

The Refreshment division - ice creams and soft drinks - managed a small increase in underlying volumes which contributed to underlying sales growth of 4.9% to €5.2bn, but the Foods unit saw underlying volumes dip 1%, although thanks to price increases, underlying sales growth came in at 3.2% to €7.1bn.

Geographically, Unilever's home region of Europe saw underlying sales contract 2.2% to €3.7bn in the second quarter.

The Americas achieved underlying sales growth of 7.5% to €4.4bn but it was the Asia/Africa, Middle East & Turkey (AMET)/Russia, Ukraine, Belarus (RUB) region where the best growth was; turnover grew to €5.2bn in the second quarter, representing year-on-year USG of 10.7%.

CashFree cash flow in the first half of 2012 was positive at €1.5bn, up from €0.8bn in the corresponding period of 2011.

Net debt at the end of June stood at €9.2bn, up from €8.8bn as at 31st December 2011, as the outflow from dividends, acquisitions and the negative impact of foreign exchange rates on net debt together exceeded free cash flow.

End-June cash and cash equivalents was €4.1bn, up from €3.5bn as at 31st December 2011, largely reflecting the group's cautious approach in the context of the ongoing volatility in financial markets.

The group has declared a quarterly dividend of 18.92p.

Outlook and price reaction"Looking forward we expect continued volatility, especially in commodity costs and economic conditions. We remain focused on profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow, driven by increased capital discipline. For 2012 we remain on track to deliver a modest improvement in core operating margin," said Paul Polman, Chief Executive Officer of Unilever.

The market tucked into the shares more enthusiastically than a hungry student devouring a Pot Noodle, with the result that the share price shot up from the previous day's close of 2,140p to 2,255p in the first two hours of trading, before a bit of profit taking set in.

JH