Unilever Plc: Results Preview

A preview of Unilever plc's (LON:ULVR) upcoming annual results.

Consumer goods giant Unilever (LSE: ULVR) (NYSE: UL.US) is due to announce its annual results on Wednesday this coming week (23 January).

At the time of writing, the shares of this FTSE 100 (UKX) Anglo-Dutch group are trading at 2,434p -- up 17% from this time last year and close to their 52-week high.

How will Unilever's businesses have performed in 2012 compared with last year? And will the results justify the rise in the share price? Here's your cut-out-and-check results table!

* Underlying sales are turnover at constant exchange rates, excluding the effects of acquisitions and disposals.

Sales

Forecast underlying sales growth (USG) of 6.5% is an aggregate of booming growth in emerging markets and poor growth in developed markets.

Emerging markets supplied 55% of Unilever's turnover in the first nine months of 2012. USG was 11.7%, slightly up on the 11.5% achieved in 2011.

USG in developed markets in the first nine months of 2012 was just 0.8%. Furthermore, behind that figure is a quarter-by-quarter trend that has turned negative.

* My estimate

Shareholders can expect to celebrate continued double-digit USG in emerging markets in Q4, but should also keep an eye on the downtrend in developed markets.

Profits

Unilever is using a new 'core operating profit' measure this year that excludes "the impact of business disposals, acquisition and disposal related costs, impairments and other one-off items". If analyst forecasts are on the button, expect to see core operating profit of €7.05 billion at a margin of 13.7%.

When it comes to earnings per share, Unilever has given a core version of the number in the past. The analyst consensus is for core earnings per share for 2012 to rise to €1.57 from the previous year's €1.41.

The forecast earnings figure in sterling puts Unilever on a lofty price-to-earnings ratio of 19. That's at the top end of the company's historical rating range, so any earnings disappointment could hit the shares pretty hard.

Dividend

Unilever declares its dividends in euros, sterling and US dollars but, in keeping with the company's reporting currency, it's the euro tail that wags the dividend dog. UK investors who take sterling dividends get a lumpy income ride due to fluctuations in the euro-sterling exchange rate.

The table below shows these fluctuations in the recent past, as well as forecasts for the Q4 dividend that will be announced with next week's results.

If Q4 dividend forecasts prove accurate, the full-year payout for shareholders receiving their dividends in euros will be 8% higher than last year. Shareholders receiving their dividends in sterling, however, will see an increase of less than 2% -- from 77.61p to 79p. The yield, incidentally, at the current share price, is close to the market average at 3.3%

Contrarian

Unilever has some attractive qualities, not least its strong position in high-growth emerging economies. Nevertheless, I prefer to invest in companies when they are out of favour with the market, rather than when the market has driven the earnings rating up to a historically high level and the dividend yield is a mundane market average.

This is the approach taken by ace City investor Neil Woodford whose £20 billion funds have thrashed the FTSE 100 over the past five, 10 and 15 years.

If you're interested in discovering Woodford's current big blue-chip bets and gaining a valuable insight into his enormously successful approach to investing, I recommend you download the exclusive free Motley Fool report, “8 Shares Held By Britain's Super Investor”.

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> G A Chester does not own shares in any of the companies mentioned in this article. The Motley Fool has recommended shares in Unilever.