Unilever Reassures Investors With Strong Earnings -- Update

By Rory Gallivan Features Dow Jones Newswires

Unilever PLC on Thursday reported a sharp rise in first-half profit and forecast better-than-expected margins for the full year, making good for now on its promise to improve its performance after fending off a $143 billion takeover approach from Kraft Heinz Co. earlier this year.

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The upbeat earnings report will reassure investors as the industry grapples with fast-changing consumer tastes and slowing sales. In response, companies throughout the sector have sought to buy and sell brands, restructure and cut costs.

After rejecting Kraft's approach in February, Unilever launched a strategic review of its operations and in April said it would sell or spin off its margarine-and-spreads business. On Thursday, the company said preparations for the exit were well under way but didn't elaborate further. Analysts have said the unit could fetch $7.5 billion to $8.5 billion.

For the six months to June 30, Unilever reported net profit of EUR3.11 billion ($3.58 billion), up from EUR2.51 billion in the same period last year. Revenue rose to EUR27.73 billion from EUR26.28 billion.

Unilever said underlying sales grew in all its categories, except for spreads, with its personal-care division benefiting from recently acquired Dollar Shave Club and its food unit lifted by a relaunch of Hellmann's mayonnaise.

The Anglo-Dutch company, whose brands also include Dove soap and Magnum ice cream, raised its forecast for full-year profit margins, predicting an improvement of 1 percentage point, compared with its earlier forecast of 0.8% percentage point.

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It also said it remains on track for underlying sales growth of between 3% and 5% over the full year. Underlying sales growth was 3% in the second quarter but the company said it should accelerate in the second half of the year, helped by new products and increased marketing spend.

Unilever shares rose 1% in early trading in London.

Write to Rory Gallivan at rory.gallivan@wsj.com

(END) Dow Jones Newswires

July 20, 2017 04:00 ET (08:00 GMT)