A dividend paying share to hold forever: Consumer goods giant Unilever pays steady dividends and has an excellent track record of generating cash. Unilever, which makes Dove soap, Lipton tea and Hellmann’s mayonnaise, said it is starting to see stronger sales growth after developing premium versions of existing brands. Unilever saw total revenues rise 12.3% to €12.8 billion (£9.2 billion) in the three months to the end of March. Most of that jump came from currency movements. Group sales fell by 2.7% to €48.4 billion last year after being dragged down by extremely volatile foreign currency markets, so the change in fortunes is encouraging. Unilever may be struggling with a sluggish performance in developed markets, which contribute 40% of sales, but profits in the year ahead will be helped by falling commodity prices. Mr Huet said that these usually take between four to six months to feed through to the company’s results but will benefit profits “without a doubt” in the second half of the year. The shares are highly rated, trading on 22 times forecast earnings. However, there is a possibility that product prices in Europe could begin to recover following the European Central Bank’s decision to launch a €1.1 trillion quantitative easing programme in January. Meanwhile, falling commodity costs should push profits up faster than sales in the second half. Unilever is a quality company and one that investors should be happy to hold on to. Given the fair winds expected in the year ahead, we maintain that long-term recommendation. Unilever at £30.11+77p. Questor Says “Hold”.
Lower £ also helps
The divi is denomd in Euros so our divi will seem even better as the £ falls and at last the £ IS falling,
RE: Headwinds turn to Tailwinds
And to think I bought Unilever as my "boring" share! Good morning.
Headwinds turn to Tailwinds
and the divi is up by 6% to boot. Whats not to like?
23 Jan '15
Morningstar's Erin Lash take Pt 2
cont ........... In December, Unilever disclosed its intentions to separate its developed market spreads business into a standalone segment, which will be 100% owned by the parent company; however, we don't think this will meaningfully change the business’ prospects. Rather, we think this news signals the business is noncore, despite management’s commentary to the contrary, and could eventually lead the firm to cut ties with this flagging segment, in line with recent efforts. - See more at: http://www.morningstar.co.uk/uk/news/133410/unilever-retains-economic-moat.aspx#sthash.3e0oK0SP.dpuf
23 Jan '15
Morningstar's Erin Lash take Pt1
Intense competitive pressures and tepid consumer spending persist, as evidenced by Unilever’s (ULVR) results, but we contend the firm’s brand intangible asset and cost edge, which form the basis of our wide moat, remain firmly in place. While we aren’t adjusting our EUR 33 fair value estimate, we’re now incorporating spot exchange rates to value its other share classes, which drives our fair value estimate changes to £24.92, down from £26.83. This will enable us to more appropriately account for the present environment, and our fair value estimates will continue to ebb and flow with spot rate changes. For the quarter, organic sales rose 2.1%, reflecting higher prices as volumes slipped 0.4%. Emerging markets, which make up 57% of sales, have slowed significantly from a year ago, up just 5.7% for fiscal 2014 compared with 8.7% growth in fiscal 2013. However, we believe the firm’s tenure in these regions which dates back more than 50 to 100 years in some instances and its subsequent grasp of consumer trends, combined with investments in new products and marketing will ensure Unilever is well positioned when growth resumes. North America posted 2% underlying sales growth driven by a balanced contribution from price and volume, though we aren’t blind to the fact that this compares to a weak period last year, when sales fell 2.4%. Given management’s commentary that promotional spending in U.S. hair care and deodorants is running rampant, it will take a few more quarters before we view this uptick as sustainable. Unilever’s efficiency initiatives appear to be gaining traction, as core operating margins expanded 40 basis points to 14.5%. The company noted that 20%-25% of its EUR 20 billion cost base is at least partly affected by oil prices, which should prove a low-single-digit tailwind in the 2015. We still expect operating margins to improve to around 16% over our 10-year explicit forecast. Emerging markets were again weighed down by trade destocking in Chinese hypermarkets, hampering sales in the country, which represents about EUR 2 billion in annual sales or 4% of its total, by around 20%. The impact is likely to be felt through the first quarter of 2015, given the tough comparison from a year ago. Management still expects growth to resume over the course of the year, though, as consumer demand has not subsided to the same degree, which we perceive to be reasonable. Food remained a weak spot, with underlying sales down 0.6% in fiscal 2014. Spreads, about 7% of consolidated sales and 10% of operating income, has been Unilever’s Achilles’ heel within this business, with underlying sales falling more than 3% in fiscal 2013 and down a similar level through the first nine months of this year. Management didn’t quantify the decline in the fourth quarter but we don’t suspect it materially improved.
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