(Alliance News) - Consumer goods firm Unilever on Tuesday said it delivered a first half performance that built on the momentum of 2021, despite challenges posed by high inflation and slower global growth.
The Dove soap maker highlighted that high input cost inflation has been "widespread" across its markets, and it is expected to remain elevated in the second half.
For the six months to June 30, revenue was EUR29.62 billion, up 15% from EUR25.79 billion last year.
Unilever posted first-half pretax profit of EUR4.359 billion, down 0.2% from EUR4.369 billion a year before.
Operating profit was EUR4.5 billion, up 1.7% from EUR4.4 billion. Underlying operating profit growth was 4.1%. Operating profit margin was 15.2% in the first half, down by two percentage points from a year before, though underlying operating profit margin was 17.0%.
Unilever said it generated underlying sales growth of 8.1% in the first half as it raised prices to counter rising costs and slumping volumes.
Underlying volume was down 1.6% in the first half and down 2.1% in the second quarter. Worst hit was the Home Care division as the Covid-19 pandemic tailed off. Volume in Home Care was down 3.4% in the first half and 3.8% in the second quarter.
"Household cleaner volumes declined as a result of a slowdown in consumers' disinfecting habits," Unilever said.
The company declared a EUR0.4268 quarterly dividend.
Looking ahead, Unilever expects 2022 underlying sales growth to be above its previous 4.5% to 6.5% guidance range. The Ben & Jerry's ice cream maker had previously forecast full-year underlying sales growth at the top end of a range of 4.5% to 6.5%.
"The medium-term macroeconomic and cost inflation outlooks are uncertain and volatile, but delivering growth remains our first priority. Against this backdrop, we continue to expect to improve margin in 2023 and 2024, through pricing, mix and savings," Unilever added.
Commented Alex Smith at research house Third Bridge: "Inflation will continue to erode Unilever's margins for the next 12 to 18 months although margin pressure has been partly mitigated by price increases in H1. Our experts see further price increases in H2."
Unilever shares were up 2.8% early Tuesday, outperforming the wider FTSE 100 index.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.5% at 7,345.42
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Hang Seng: up 1.7% at 20,914.16
Nikkei 225: closed down 0.2% at 27,655.21
S&P/ASX 200: closed up 0.3% at 6,807.30
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DJIA: closed up 90.75 points, or 0.3%, at 31,990.04
S&P 500: closed up 0.1% at 3,966.84
Nasdaq Composite: closed down 0.4% at 11,782.67
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EUR: up at USD1.0226 (USD1.0215)
GBP: up USD1.2060 (USD1.2041)
USD: unchanged at JPY136.70 (JPY136.71)
GOLD: up at USD1,724.04 per ounce (USD1,718.56)
OIL (Brent): up at USD106.85 a barrel (USD104.78)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's key economic events still to come
1100 BST UK CBI distributive trades survey
0900 EDT US monthly house price index
1000 EDT US new residential sales
1000 EDT US Richmond Fed business activity survey
1000 EDT US consumer confidence index
1300 EDT US Federal Open Market Committee policy meeting starts
1630 EDT US API weekly statistical bulletin
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EU member states have agreed an emergency gas plan that aims to soften the impact of a potential total stoppage in Russian gas supplies, dpa has learned. The plan provides for a voluntary 15% reduction in member states' natural gas consumption between August 1, 2022 and March 31, 2023, diplomats told dpa. In addition, a mechanism will be created to trigger a bloc-wide alert in the event of widespread gas shortages and to implement binding savings targets. The agreement sees the stringent terms of the commission's first draft considerably watered down, with various get-out clauses introduced and the threshold for the introduction of binding savings targets also being raised. Under the terms of the amended agreement, binding savings targets can now only be enforced by the European Council rather than by the EU Commission.
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BROKER RATING CHANGES
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PEEL HUNT STARTS ITM POWER WITH 'BUY' - PRICE TARGET 500 PENCE
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BERENBERG CUTS MADE.COM PRICE TARGET TO 23 (72) PENCE - 'HOLD'
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COMPANIES - FTSE 100
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Jet engine maker Rolls-Royce has hired former BP executive Tufan Erginbilgic as its new chief executive officer. Erginbilgic will take up his new role on January 1, succeeding Warren East who had previously announced his intention to step down at the end of this year. In his last role before leaving in 2020, Erginbilgic led BP's downstream business, which included Refining, Petrochemicals, Service Station Network, Lubricants, Midstream operations and the Air BP jet fuel operation.
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Contract caterer Compass said the strong growth momentum seen throughout the first half of the year continued into the third quarter, with all three of its geographic regions operating above 2019 levels. For the three months to June 30, Compass said underlying revenue was up 109%. North American revenue was up 112%, while revenue from Europe and the rest of the world were 104% and 106% stronger, respectively. Compass said new business growth continued to accelerate, benefiting from an increase in first time outsourcing due to ongoing operational challenges and heightened inflation. Looking ahead, Compass raised its 2022 organic revenue growth guidance to around 35% from around 30%. It also confirmed financial 2022 operating margin guidance of over 6% and now expects exit margin to "moderate slightly" from around 7% due to the strong net new performance and ongoing inflationary pressures. "While we are mindful of the challenging macroeconomic environment, we remain excited about the significant structural growth opportunities globally. With a clear strategy, operational scale, and market leading offer, Compass is very well positioned to capitalise on the increase in outsourcing opportunities. Longer term, we expect revenue and profit growth above historical rates, returning margin to pre-pandemic levels, and rewarding shareholders with further returns," the company said.
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COMPANIES - FTSE 250
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easyJet revealed a quarterly loss after taking a GBP133 million hit from recent airport disruption, but insisted its operations are getting back to normal following cuts to its flight programme. The Luton Airport-based budget airline reported a group headline loss before tax of GBP114 million for the three months to June 30, blaming "widespread operational challenges" and flight cancellations due to staff shortages at airports. The result marked an improvement on the GBP318 million loss seen a year ago, but comes despite easyJet's passenger numbers jumping more than sevenfold to 22 million in the quarter. easyJet boss Johan Lundgren said its summer operations had now "normalised" and were "much improved" in July after recent moves by airports to demand a cut in flight programmes. The carrier said it remains focused on ensuring "smooth operations this summer" and will continue to "fine tune" its schedule, signalling further flight cuts if needed.
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COMPANIES - OTHER UK
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Heathrow Airport said it remains loss-making and does not forecast paying dividends to shareholders this year. The west London airport's adjusted loss before tax during the first six months of the year was GBP321 million, narrowed from GBP787 million during the same period in 2021. At the pretax level, Heathrow swung to a profit of GBP263 million from a loss of GBP868 million. It attributed the improvement to a spike in passenger numbers, from 3.9 million to 26.1 million. Fees paid by airlines also rose, but this was "offset by increased costs as we invested ahead of demand", according to the airport. A shortage of ground handlers is "the constraint on Heathrow's capacity" as airlines struggle to replace staff let go due to the pandemic, according to the airport.
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COMPANIES - GLOBAL
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UBS reported growth in second quarter net profit, despite total revenue for the Swiss bank coming in flat. In the three months that ended June 30, the lender recorded a net profit of USD2.12 billion, an increase of 5% year-on-year from USD2.01 billion. Diluted earnings per share rose to USD0.61 from USD0.55. Net interest income rose 2% to USD1.67 billion from USD1.63 billion, as net free & commission income dropped 14% year-on-year to USD4.77 billion from USD5.56 billion. Total revenue came in flat at USD8.92 billion, compared to USD8.90 billion. The bank set aside USD7 million for expected credit losses, reversed from a USD80 million release the year prior. CET1 capital ratio at the end of the quarter was 14.2%, compared with guidance of around 13%.
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Tuesday's shareholder meetings
AO World PLC - AGM
Bytes Technology Group PLC - AGM
Dekel Agri-Vision PLC - AGM
Firering Strategic Minerals PLC - AGM
Mitie Group PLC - AGM
Momentum Multi-Asset Value Trust PLC - AGM
nanosynth group PLC - AGM
NewRiver REIT PLC - AGM
Ninety One PLC & Ltd - AGM
OnTheMarket PLC - AGM
OptiBiotix Health PLC - AGM
Telecom Plus PLC - AGM
Vodafone Group PLC - AGM
Xeros Technology Group PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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