A Closer Look At Unilever’s Q1 And Fiscal 2018 Outlook

by Trefis Team
Unilever Group
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Unilever‘s (NYSE:UL) turnover declined 5% year-over-year (y-o-y) to €12.6 billion in Q1, as the company’s underlying sales growth of 3.4% including spreads, mostly comprised of only volume growth. The company’s pricing growth remained low at 0.1%, largely due to the impact of GST in India, strong price-driven competition in Europe and North America, and low commodity inflation overall. The company’s turnover was also significantly impacted by strengthening of the euro. In terms of operating segments, the company saw growth in all its divisions – Beauty & Personal Care grew by 3.9% y-o-y, Home Care was up by 4.9% y-o-y, and Foods & Refreshment grew by 3.7% y-o-y.

We have created an Interactive Dashboard which outlines our forecasts for the company in fiscal 2018. You can modify our forecasts to see the impact any changes would have on the company’s earnings and valuation.

Emerging Markets Lead The Way

Emerging markets play a vital role in Unilever’s business, as almost 55% of its total revenues come from these markets. Market conditions improved on account of growth in global GDP. Unilever’s major growth came from emerging markets, which grew 5.1% in Q1. On the other hand, North America delivered 2.9% growth, on the back of the timing of some innovations and promotions and strong performance of acquisitions. However, growth in Europe was flat, which led to an overall growth in the developed markets of only 1.1%.

Future Outlook

Going forward, Unilever continues to forecast underlying sales growth of 3% to 5% for 2018 and an improvement to 20% in the underlying operating margin, which will keep it on track for its 2020 targets.

Our $54 price estimate for Unilever’s stock is slightly lower than the current market price.

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