Unilever plc (UL) posted solid earnings for the first six months of the year and said it sees margin improvement and accelerating growth into the second half of 2017.
Unilever said earnings per share rose 14.4% from the same period last year to €1.13 for the six months ending in June, well ahead of the FactSet consensus of €0.84 per share. Sales for the period, the company said, rose 5.5% to €27.7 billion ($31.9 billion). Underlying sales growth for the second quarter rose 3%, the company said, to €14.4 billion, just shy of the company-supplied consensus of 3.2%.
"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," said CEO Paul Polman. "Our change programme 'Connected 4 Growth' ('C4G'), which started in the autumn of 2016, is delivering ahead of plan."
"We now expect an improvement in underlying operating margin this year of at least 100 basis points and strong cash flow," Polman added, while forecasting that sales growth is on track to rise between 3% and 5% for the full year.
However, due to "investments and innovation", CFO Graeme Pitkethly said margin improvement in the second half of the year will trail the first, which saw underlying operating margins improve 180 basis points to 17.8%.
Unilever shares were marked 0.51% higher in the opening minutes of trading in London and changing hands at 4,985 pence each, extending their year-to-date gain past 31%.
However, the bulk of those gains followed a failed $143 billion bid from Warren Buffett's Kraft Heinz Co. (KHC - Get Report) in February and the company's strategic review that followed. In that assessment, Unilever said it would look to sell its spreads division, which includes brands such as Flora and I Can't Believe it's Not Butter, which analysts have said could be worth $7.6 billion.
"The preparation for the exit from spreads via a sale or de-merger is well underway," the company said Thursday. "The review of the dual-headed legal structure is also progressing well and we expect the Board to decide the outcome before the end of the year."