A sales miss at consumer goods colossus Unilever (ULVR) following a truckers’ strike in Brazil overshadows better-than-expected earnings as the shares are broadly unmoved at £41.77.
In the quarter to June, organic sales growth at the Ben and Jerry’s and Dove owner was 1.6%, but missed analysts’ expectations by 60 basis points.
Pre-tax profit was also slightly lower in the first half of 2018, down from €4.63bn to €4.33bn.
According to chief exec Paul Polman, Unilever benefitted from volume-driven growth across the board thanks to innovative products and expansion in growth markets. Though he admitted market conditions remained challenging with prices under pressure in Europe and North America.
Liberum analyst Robert Waldschmidt says a 7.8% jump in underlying earnings per share to €1.22 beat expectations by 3% thanks to a combination of sales growth (albeit modest) and a better operating margin.
He is cautious on the company's ambition to deliver sales growth of 3% to 5%, and sees failure to deliver as a potential catalyst for a pullback in the shares.
‘Over 2018-2020, we expect Unilever to deliver 4% organic sales at a compound annual growth rate and a 20% underlying earnings before interest and tax,’ comments Waldschmidt.
The strongest region was Asia, which boasted 6.3% organic sales growth over the last quarter.
