Published: Sat, April 22, 2017
Health Care | By Jeffery Armstrong

Nestlé and Unilever in tasty sales

Nestlé and Unilever in tasty sales

Unilever (UL) and Nestle (NSRGY) hinted at slowing growth in US markets Thursday even as the two brand giants posted better-than-expected first sales updates and improving price dynamics.

The results could boost investor enthusiasm for Unilever, whose shares have remained higher since February when it received, and swiftly rejected, a $143bn (€133bn) takeover offer from rival Kraft Heinz.

Looking ahead, Unilever reiterated the forecast it gave earlier this month, saying it was on track for sales to grow 3 to 5 percent this year, with margin improvement of at least 80 basis points and a dividend increase of 12 percent. Compared with Unilever, Nestle has much more exposure to the shrinking North American packaged food market, where a late Easter and one less trading day in the quarter compounded weakness due to changing consumer tastes and intense competition. But its personal-care unit fueled most of the growth, not Unilever's food division.

Turnover increased 6.1 per cent to €13.3bn (£11.1bn), and the firm said this included a positive currency impact of 2.4 per cent. "This reflects our continued investment in both innovations and brand support, and reconfirms the strength of our long term sustainable compounding growth model", CEO Paul Polman said.

Unilever's share price has slipped marginally lower in London this morning, having lost 0.32 percent to 3,937.50p as of 08:12 BST, underperforming the broader United Kingdom market, with the benchmark FTSE 100 index having climbed into positive territory and now standing 0.16 percent higher at 7,130.03 points.

Excluding the declining spreads business, total sales would have grown by 3.4pc.

That is above analyst expectations for a sales increase of 2%.

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

Over the past four years, Kensington's said it has seen strong growth.

Unilever was more aggressive than Nestlé in raising food prices in the quarter, with a 3.4% increase, led by more expensive versions of Magnum and Ben & Jerry's ice cream.

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