Tuesday, 19 January 2016

Unilever - Full Year Results

Unilever has become one of the world's leading suppliers of fast-moving consumer goods. Some well-known brands include Marmite, Flora Margarine, PG tips, Pot Noodle, Ben & Jerrys Ice Cream, Colman’s Mustard, Magnum Ice Cream, Hellmann’s Mayonnaise and in personal care - Dove soaps,  Lynx Deodorant, Sure Deodorant, Vaseline, Brylcreem

The company states that more than 2 billion consumers worldwide use a Unilever product every day.

Results

My previous post on Unilever was at the same time last year. Today they have announced results for the full year to 31st December 2015 (link via Investegate).

The Company reported an impressive 10% rise in underlying sales and a 14% increase in core earnings per share. However profits were down 6% on 2014.

Unilever said underlying sales growth in emerging markets, where it makes more than half its sales, rose to 7.1% from 5.7% in 2014.

CEO, Paul Polman said "We are preparing ourselves for tougher market conditions and high volatility in 2016, as world events in recent weeks have highlighted. Therefore it is vital that we drive agility and cost discipline across our business. We are further strengthening our innovation funnel while shortening innovation cycle times, stepping up our digital capabilities and rolling out a global zero based budgeting programme. Our priorities continue to be volume-driven growth ahead of our markets, steady improvement in core operating margin and strong cash flow."


Dividends

A 4th quarterly dividend of 30.2 euros - 23p will be paid in March. This will make a total of 120.8 euros for the full year - an increase of  5.9% but after FX conversions, the dividend paid to UK holders is just 88.49p for the full year (90.02p 2014).


Unilever is one of those companies with strong brands and a wide economic moat which helps it to maintain an edge over competitors and provide good long-term returns for patient investors. It is a top holding for Nick Train’s Finsbury Growth & Income Trust comprising around 9.0% of the portfolio.

Although returns have been affected by currency fluctuations, these things have a way of balancing out over the longer term.

By mid morning, the shares were up ~2% at £29.00 - more or less in line with the wider markets.

Although I have been reducing my shares portfolio in recent months, I have so far resisted the temptation to dispose of this one which has been one of the stalwarts of my  portfolio for several years. Total return over the past year was 15% which is far ahead of the FTSE 100 - there is little doubt this is a quality operation so I may well hang in for a while longer.

For those who would like a more in depth overview, I recommend a recent post by No More Waffles.

4 comments:

  1. Ciao DIYUK,
    I am keeping them, looking at increasing positions if price goes a bit more down in the 27 ish range. It's a solid company, one of the foundation blocks of my portfolio. How comes you are dismissing them? Is it part of the plan to move everything to mutual funds?

    ciao ciao

    Stal

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    Replies
    1. Stal,

      Good to hear from you!

      Yes, part of my new strategy is to wind down my individual shares and focus on collectives - some inv. trusts but more index funds like Vanguard Lifestrategy.

      I sold around half my portfolio last year and hope to fully implement the new strategy during the coming 12 months...we shall see.

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  2. Whilst I view your move to passive funds as sensible, I myself have Investment Trusts, there are certain companies that are a must. Coca Cola, Nestle and such like. Unilever is definitely one of them.
    Its a bit like selling one of your best players in a football team.

    Regards

    Louis

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    Replies
    1. Louis,

      If and when I sell ULVR I will still have quite a significant holding via my ITs and passives so I am not overly concerned but your analogy to the star player is a good one!

      Good to hear from you - its been a while! I hope your investing is going OK.

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