Consumer goods giant Unilever has upgraded its annual outlook after posting its strongest quarterly sales performance in more than a decade, ahead of a £33.8 billion deal to separate its food division.
Strong First-Half Performance
Shares in the Marmite to Dove soap firm jumped 6% in morning trading on Tuesday as Unilever reported a robust first half, with sales growth accelerating to 5.8% in the second quarter. This was driven by a 5.5% increase in sales by volume – the highest underlying volume growth in over ten years.
Overall sales edged up 0.5% in the first half, while pre-tax profits rose 1.8% to 4.66 billion euros (£3.98 billion) for the six months to June 30. Operating profits increased 2.6% to 4.89 billion euros (£4.17 billion).
Volume Growth in Over a Decade
Unilever now expects full-year sales growth within its 4% to 6% medium-term guidance, having previously forecast it would be at the lower end of the range. The group also anticipates around 3% underlying volume growth, compared to earlier guidance of at least 2% growth for the year.
Food Business Joint Venture
The half-year results come as Unilever moves to split its food business into a joint venture with US rival McCormick. The joint venture, announced in March, will create a major food giant combining brands such as Unilever’s Marmite with McCormick’s French’s mustard.
However, some Unilever shareholders recently criticised executives at the annual general meeting for approving the major deal without putting it to a shareholder vote.
Unilever chief executive Fernando Fernandez said on unveiling the interim results: “We have delivered a strong volume-led performance in the first half, with a significant step-up in the second quarter – the best volume quarter at Unilever in over a decade.
“These results show our ability to continue performing while transforming our portfolio.
“Our combination of Foods with McCormick is progressing well and will unlock significant value.”
