Unilever Plc. (UL) delivered robust earnings of $1.09 per share in the second quarter of 2011, moving up by 10% from the year-ago period. It also surpassed the Zacks Consensus Estimate of 36 cents by 11.11%. Profits went up based on improved underlying profit and disposals, with lower interest and pension costs also contributed to the higher earnings.
The current Zacks Consensus Estimate is $2.29 for the full quarter of 2011. The earnings estimate for the next year is pegged at $2.52.
Consolidated Revenue and Margins
Unilever’s quarterly net sales increased 7.1% to $17,007.8 million compared with the prior-year period. The upswing came on the back of successful introduction of Magnum in the United States and Indonesia. The brand is popular in about 40 markets worldwide. Dove Men+Care, Axe/Lynx, Pond’s Men, Knorr Stockpots and Domestos are the brands that fuelled growth in the quarter.
Personal Care went up 5.8% from the year ago period to $5,290.7 million mainly driven by strong demand for deodorants, skin cleansing and hair care. While the relaunch ofDove Hand & Body lotion was quite promising for Europe, Dove Damage Therapy and Dove Nourishing Oil Care coupled with the impact of the relaunch of Clear in Asia boosted the Hair Care segment.
Other Financial Updates
The company exited the year with cash and short-term cash investments of $1,966 million, down from $2,397 million. Inventories increased to $4,633 million from $4,398 million in the year ago period.
Our Take
The company continues to face margin pressure from rising commodity costs. Moreover, management’s initial goals have proved to be quite far-fetched. Presence of tough competitor like Procter & Gamble Co. (PG) concerns us.
Unilever holds Zacks #4 Rank, which translates into a short-term Sell rating.
PROCTER & GAMBL (PG): Free Stock Analysis Report
UNILEVER PLC (UL): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment