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Unilever Shares Fall on Lower 1st Half Pretax Profit, Warning of Rising Costs — 2nd Update

By Matteo Castia

 

Shares in Unilever PLC fell Thursday after the company reported a slight fall in pretax profit for the first half of the year, and said it expects full-year margins to remain flat as a result of rising costs.

The Anglo-Dutch multisector-goods producer--which owns consumer brands such as Ben & Jerry's ice cream, Dove soap and Cif and Domestos cleaning products--posted a pretax profit of 4.37 billion euros ($5.15 billion) for the period, compared with EUR4.53 billion a year earlier.

Profitability was hurt by a negative impact of 6.1% from currency-related items, the company said.

First-half turnover came in at EUR25.79 billion, including EUR13.45 billion in the second quarter, the company said. This compares with prior-year figures of EUR25.71 billion and EUR13.29 billion, respectively.

Underlying sales rose 5.4% on year in the first half, including a 5.0% increase in the second quarter. Underlying sales of foods and refreshment jumped 8.1%, while home-care underlying sales rose 4.5%, the company said.

Beauty and personal-care underlying sales increased 3.3% on the year, with underlying sales growth accelerating to 4.2% in the second quarter, helped by increased personal-care consumption as restrictions were eased in some markets, the company said.

"Restrictions on daily life continue around the world, impacting channel dynamics, sales mix and consumer behavior," the company said.

The board declared a second-quarter dividend of 42.68 European cents a share.

"We are confident that we will deliver underlying sales growth in 2021 well within our multiyear framework of 3% to 5%, despite more challenging comparators in the second half," Chief Executive Alan Jope said. However, Mr. Jope also said that underlying operating margin for the full year is likely to remain around flat because of mounting costs.

"We have seen further cost inflation emerge through the second quarter. Cost volatility and the timing of landing price actions create a higher-than-normal range of likely year-end margin outcomes," he said.

Shares in London at 0715 GMT were down 161 pence, or 3.7%, at 4,141 pence.

 

Write to Matteo Castia at matteo.castia@dowjones.com

 

(END) Dow Jones Newswires

July 22, 2021 03:51 ET (07:51 GMT)

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