Unilever Revenue Growth Beats Estimates as Europe Stabilizes 

Unilever (UNA), the maker of Magnum ice cream and TRESemme shampoo, reported first-quarter sales growth that beat estimates and said its North American pasta-sauce and Slim Fast units are under review amid talk of disposals.

Underlying sales gained 3.6 percent, Unilever said today in a statement, compared with the 3.3 percent median estimate of 10 analysts surveyed by Bloomberg News. Markets stabilized in Europe, while slowing in emerging regions, the company said.

Unilever’s decision to review the Ragu sauces and Slim Fast diet-food units is part of Chief Executive Officer Paul Polman’s ongoing pruning of food brands. Unilever sold Skippy peanut butter and Wish-Bone dressings last year, and its European meats business including the Peperami brand in February.

Chief Financial Jean-Marc Huet declined to comment today on whether the company had received any interest from bidders in the units. Unilever has hired Morgan Stanley to sell the sauce unit and expects to get between $1.5 billion and $2 billion, people with knowledge of the matter said in March.

“We’ve taken lot of steps to improve our portfolio in North America and are coming to an end of the overall review,” Huet said in a telephone interview.

Unilever shares fell 0.2 percent 30.63 euros at 9:16 a.m. in Amsterdam trading.

Underlying selling volume rose 1.9 percent in the first quarter, Unilever said, beating the 1.7 percent median estimate of nine analysts. Prices increased 1.6 percent, compared with the median estimate for a 1.5 percent gain.

‘Solid Result’

“This counts as a solid result in our view,” said James Edwardes Jones, an analyst at RBC Europe.

Sales growth slowed from the fourth quarter’s 4.1 percent, due mainly to weaker conditions in emerging markets. Companies from Nestle SA (NESN) to Diageo Plc (DGE) have pointed to political uncertainty and weakening growth in some key developing economies, previously seen as a panacea to counterbalance the more developed markets of the U.S. and Europe.

Underlying revenue in emerging markets rose 6.6 percent in the quarter, slowing from 8.4 percent in the previous three months. Europe posted growth of 0.1 percent, compared with a decline of 1.3 percent in the fourth quarter.

Unilever also said today that profit margins are likely to narrow in the first half of the year, before rising in the latter part of the year. The contraction reflects “the phasing of advertising investment, restructuring spend and savings.”

A sale of Slim-Fast would follow Nestle’s disposal of diet businesses. The Swiss company agreed in November to sell most of its Jenny Craig unit for an undisclosed amount.

Unilever bought Slim-Fast in 2000 for $2.4 billion. The business subsequently lost fans as people trying to lose weight sought success with low-carb diets such as South Beach and Atkins. Five years later, Unilever took charges totaling 850 million euros ($1.2 billion) to account for the brand’s reduced value.

Source: bloomberg

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