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Unilever (ULVR) – Finals PTP: £3,763m (£3,419m) Divi: 51.1p (47.7p)

The food colossus managed to fight off rising commodity prices last year, unlike so many other manufacturers lately, posting strong underlying sales growth of 5.5% that more than offsets the decline of 50 basis points in operating margins.

The group has been substantially transformed over the past two years, with a number of businesses sold, management changes and deep cuts to the cost base. The benefits of a leaner Unilever are starting to show up in its financial performance, with profits jumping 10%, no mean feat for a £26 billion company.

Targeting the rich growth potential of emerging markets has been the group’s other major achievement, with Unilever unveiling the acquisition of Inmarko, Russia’s largest ice cream maker just a week or so ago, although for how much the company isn’t saying.

While margins have remained under some pressure, reversing slightly last year, the group believes this can be turned round, and is looking at a 15% increase by 2010. A €1.5 billion share buyback is on the cards, albeit less than many City watchers expected, but Unilever looks well set to fully exploit the unquestionable power of its many brands, including Lipton’s Tea, Dove soap and Clear Shampoo.

EPS of 104p is pencilled in this year, implying around 10% growth, placing the shares on a current year PE of about 17, a unfair discount to other multinationals.

Shares says: A solid share in this market, and well worth holding.

by: John Marshall

The writer holds shares in this company