Unilever sales up in third quarter

The company’s gross margin increased by 290 bps thanks to efficiencies and lower costs. Advertising and promotion spend was reported as being 130 bps higher.

Unilever said that it in the third quarter it had opened a new Research and Development centre in Shanghai and that it had disposed of its plantations in the Congo.

In the nine month period Unilever’s underlying sales growth was 4.1 per cent, with volumes increasing 1.4 percent.

Net cash flow from operating activities was 1.6 billion euros ahead of last year thanks to improved working capital.

Paul Polman, Chief Executive Officer: “We have seen further good progress across all regions and the majority of countries and categories. Our market shares are responding to stronger innovations, greater consumer value, increased marketing support and better execution. Market conditions remain challenging and in this environment we will continue to increase investment behind our brands and build long-term capabilities in research and development. We are on track towards our objective of restoring volume growth while protecting margins and cash flow for the year as a whole.”

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:

“Unilever continues to inch closer to emulating the performance of rival household goods group Reckitt Benckiser. Sales have again surprised on the upside, whilst the adjusted profit margin has also improved. Like Reckitt, an emphasis on innovation and sustained advertising spend is driving performance, with cost saving initiatives providing additional momentum.

"Volatile commodity prices and foreign exchange markets provide downside risks going forward, whilst the improving trend in consumer confidence seen over recent months remains vital. A rumoured move for Cadbury continues to be a factor in investors’ current thinking. Any decision by management does in itself send a signal, with a call to stay on the sidelines suggesting confidence in continuing organic growth, while a takeover bid might suggest a greater dependency on cost cutting momentum. All in all, despite a challenging outlook statement, Unilever is today vindicating a 35pc plus upturn in its share price over the last 6 months. Market consensus opinion currently denotes a cautious buy.”