Unilever Shares Jump as Turnover Increases 11%


LONDON -- Unilever released its final results this morning, and investors saw growth across the board in 2012 despite the tough economic conditions.

Underlying sales in the fourth quarter grew 7.8% (comprising volume growth of 4.8% and price growth of 2.9%), helping the full-year figure to a 6.9% rise overall, with volume growth of 3.4% and price growth of 3.3%.

Turnover for 2012 was up 10.5% to 51.3 billion euros, helped by a positive impact from foreign exchange of 2.2% and acquisitions net of disposals of 1.1%. Operating profit lifted 9% to 7 billion euros, while core operating margin rose 30 basis points to 13.8%, with gross margin increasing 10 basis points. Advertising and promotions were up 470 million euros at constant exchange rates.

Interestingly for private investors, underlying sales growth in emerging markets saw a leap of 11.4%. This now accounts for 55% of Unilever's turnover. Previously, the company hasn't been widely recognised as a play on emerging markets, but with these results it suggests Unilever may be evolving as such -- indeed, chief executive officer Paul Polman stated: "We continue to make good progress in transforming Unilever into a sustainable growth company."

Polman went on to say:

All categories and all geographies grew with a good overall balance between volume and price. Emerging markets again contributed double-digit growth helping us exceed 50 billion euro turnover, an important milestone in our journey to double the size of Unilever from 40 [billion] to 80 billion euros while reducing our environmental impact.

However there is no room for complacency: markets will remain challenging, with intense competition and volatile commodity costs. We remain focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow.

On this morning's news, Unilever's shares were up 2.4% (59.30 pence) at the time of writing to 2,510.30 pence. The quarterly dividend (payable in March) was confirmed as 0.243 euros per share. The company remains financially comfortable, with free cash flow of 4.3 billion euros.

Shareholders will also be pleased with the news that core earnings per share jumped 11% to 1.57 euros, which equates to around 1.32 pounds, putting Unilever's shares on a relatively lofty price-to-earnings figure of 18. This is historically quite high for the company, but with today's final results showing growth in all categories -- and, indeed, all geographies -- there is much to be encouraged for Unilever's future, especially if it continues its fast growth in emerging markets.

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