Unilever NV (UL) posted better-than-expected first quarter revenues and increased its quarterly dividend by 12% as the company continues its efforts to appease shareholders after a failed $143 billion takeover attempt by Kraft Heinz (KHC) .
Unilever said sales for the first three months of the year rose 6.1% to €13.3 billion ($14.3 billion), thanks in part to a positive currency impact of around 2.4%. Underlying sales growth was measured at 2.9%, the company said, well ahead of market expectations and helped in part by increasing pricing power that offset a modest slowdown in volumes. Emerging markets growth was an impressive 6.1%, Unilever said, with pricing up 5.3% and volumes up 0.8%.
"The first quarter shows growth once more ahead of our markets," CEO Paul Polman said. "This reflects our continued investment in both innovations and brand support, and reconfirms the strength of our long term sustainable compounding growth model."
"The actions we are taking keep us on track for another year of underlying sales growth ahead of our markets, in the 3 - 5% range," Polman added. "We also expect an improvement in underlying operating margin this year of at least 80 basis points and strong cash flow. We are raising the dividend by 12%, reflecting the confidence in our outlook."
Unilever shares rose 1.61% by 10:50 BST in London to change hands at 4,001.5 pence each, extending their three month gain to nearly 20%.
The Anglo-Dutch maker of Dove soap and Ben & Jerry's ice cream said on Feb 22 that it would conduct a "comprehensive review of options available to accelerate delivery of value for the benefit of our shareholders" after it rejected a a blockbuster $143 billion offer from Kraft Heinz, an approach the group said "highlighted the need to capture more quickly the value we see in Unilever. We expect the review to be completed by early April, after which we will communicate further."
In a separate statement, issued shortly after the review announcement, Unilever said it expects its core operating margins, a measure of profitability from sales, to improve to "the upper end of its 40-80 basis points guidance."
Unilever's overall core operating margin was 15.3% last year, according the company's latest earnings statement, an improvement of 50 basis points from 2015. Its European operations had the highest margins, at 17.1%, while its Americas division had the lowest, at 14.6%.
