Unilever (LSE: ULVR) (NYSE: UL.US) is due to announce its half-year results on Thursday this coming week (25 July).
At the time of writing, the shares of the consumer-goods giant are trading at 2,764p – up a nourishing 14% over the last six months compared with a 7% rise for the FTSE 100.
How will Unilever have performed in the first half compared with last year’s first half? And will the company be on track to meet analyst consensus forecasts for this year’s key full-year numbers? Helpfully, Unilever publishes detailed analyst forecasts within the investor section of its website.
|Underlying sales growth*||5.5%||5.2%||5.5%|
|Core operating profit||—||€3.55bn||€7.28bn|
|Core operating margin||—||13.9%||14.0%|
|Core earnings per share (EPS) – diluted||—||€0.78||€1.61|
|Core EPS growth||—||5.3%||5.3%|
|Dividend per share||€0.269||—||€1.076|
* Underlying sales are turnover at constant exchange rates, excluding the effects of acquisitions and disposals.
Analysts see turnover of €25.62bn for the first half, with Q2 showing an improvement on Q1. Q2 underlying sales growth of 5.5% represents a decent improvement on Q1’s 4.9% and brings the H1 number to 5.2%.
Look for a core operating profit of €3.55bn for H1 — a 2.3% increase on the €3.47bn produced during the same period last year. Also look for a small improvement in operating margin to 13.9% from 13.7%.
Analysts are expecting fairly steady growth of 5.3% in core EPS through the current year, and have pencilled in H1 EPS of €0.78.
The consensus forecasts published on Unilever’s website don’t include dividends, but we can make a confident stab at it ourselves. The company is in the habit of paying four equal quarterly dividends, and has already paid a Q1 dividend of €0.269 — up 10.7% on last year. Therefore, we can expect the board to declare another €0.269 dividend for Q2. Extending the sequence through to Q4 suggests shareholders can expect the dividend for the full year to total €1.076.
Room for improvement
Emerging markets are driving Unilever’s growth: a 10.4% increase in underlying sales growth during Q1 this year was the eighth successive quarter that these markets have delivered double-digit growth.
Developed markets — particularly Europe — are another story, as the table below shows.
|Developed markets||Q1 2012 (%)||Q2 2012 (%)||Q3 2012 (%)||Q4 2012 (%)||Q1 2013 (%)||Q2 2013 (%)|
|Underlying sales growth||+4.2||-0.4*||-1.2||+4.0||-1.9||?|
* My estimate
Growth turned negative during Q2 last year, with the decline accelerating through Q3. A healthy bounce-back for Q4 was short-lived, and Q1 this year was negative to the tune of 1.9%.
Management claimed the poor Q1 performance was because: “Europe faced a particularly strong prior year comparator and … the slow start to the ice cream season and weakness in spreads”.
On this reasoning, we should be looking for strong Q2 underlying sales growth in developed markets. The prior-year comparator is weak (-0.4%) and surely ice-cream sales have been absolutely booming!
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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 Unilever.