UN Sees a Decent Share of Sales Growth

For Thomas' preview heading into the Unilever conference call, please click here.

Unilever (UN - commentary - Cramer's Take) reported EPS from continuing operations of 57 euros vs. 34 euros last year, boosted mainly by business disposals. Underlying sales growth was 8.3%, to 10.4 billion euros, for a slight gain from the 7.4% year-to-date increase.

European sales growth was 2.5%, about flat with the first-half sales trend and consisting of over 4% pricing and 2% volume declines. Central and Eastern Europe grew about 10%, with price and volume gains. Russia was very strong. Western Europe was up 1.4%, with the biggest weakness in France and with Germany now slowing as private label continues to grow. The operating margin for continuing operations, as I calculate it, rose from 17.6% to 17.7%. Gross margins were lower, but absolute cost increases were recovered by price increases. Overhead was described as sharply lower, the result of the ongoing restructuring.

The Americas operations had an 8.2% sales growth. U.S. revenue growth has been around 4% throughout this year. All of the growth is pricing, with lower volumes coming mostly in personal care, where management believes that the company is holding share in down categories. Food volumes are up. Latin American growth was 12% on strong pricing and "modest" volume gains. Brazilian sales are accelerating, while Mexican sales slow. Here, restructuring and pricing have covered commodity costs. My adjusted operating-margin numbers show a 0.1% increase, to 15.6%, in the quarter.

Asia/Africa had 16% sales growth, a slight acceleration from the first half, and market share was generally being taken in both volume and dollars. The company is taking prices up in China for the first time this year, and volumes there "continue to grow well." Japan is the only ongoing trouble spot. I calculate an operating profit margin increase of 0.9%, to 14.8%.

No further stock buybacks are coming, which not surprising in this environment.

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At the time of publication, Thomas had no positions in the stocks mentioned.