Unilever profits jump by a fifth as Magnum and Domestos deliver boost

 
Jasper Jolly
Magnum Ice Cream Hosts Opening Night Party For The Tribeca Film Festival 2012 Premiere Of 'The Five Year Engagement'
Make it a Magnum: Ice cream sales helped Unilever sales rise (Source: Getty)

Consumer goods giant Unilever has reported a “substantial” pick-up in profitability helped by a double-digit increase in Magnum sales and strength in its Domestos brand.

The figures

Net profits increased 22.4 per cent in the first half of 2017 compared to 2016, with turnover increasing 5.5 per cent.

Underlying sales grew three per cent year-on-year for both its second quarter and for the first half as a whole.

Earnings per share increased by 24.1 per cent to €1.09, while underlying earnings per share rose by 14.4 per cent.

Operating margins increased by 310 basis points to reach 17.5 per cent.

Unilever shares rose by more than half a percentage point at the open.

Why it’s interesting

Unilever makes Marmite, among many, many other brands - but there has been no love it or hate it relationship with shareholders in recent months, however, with shares boosted by stronger performance and the takeover attentions of US rival Kraft.

Back in February, Unilever rejected Kraft’s $143bn (£111bn) bid. But it now turns out the offer also alerted shareholders to previously unrealised value in the business.

The announcement of a strategic review and the sell-off of some underperforming brands seem to be helping profits, with emboldened investors looking for other ways to pressure the firm into releasing more value.

However, this week Unilever missed out in a £2bn bidding war against US spice maker McCormick & Company for rival Reckitt Benckiser's food business.

What Unilever said

Paul Polman, Unilever's chief executive, said: “Our first half results show continued growth well ahead of our markets and a substantial step-up in profitability despite the persisting volatile global trading environment. It once more shows the validity of Unilever's long-term compounding growth model.”

“The transformation of Unilever into a more resilient, more competitive and more profitable business is accelerating.”

Polman hailed its growth strategy, catchily titled “Connected 4 Growth”.

He said it is “making our business even more agile, less complex and increasingly responsive to fast-changing consumer trends. The resulting increase in innovation speed and effectiveness will allow us to grow ahead of market.”

In short

With profit growth this tasty, it would be no surprise if potential owners were licking their lips.

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