Unilever reports rising sales and boosts dividend

Paul Polman Unilever's chief executive

Paul Polman Unilever's chief executive

To appease investors, some of which were disappointed by the company's refusal to engage in takeover talks, Unilever announced plans this month aimed at lifting shareholder returns.

The household-product giant, whose portfolio includes Hellmann's mayonnaise and Ben & Jerry's ice cream, has agreed to buy Sir Kensington's, an upstart food company that makes natural and non-GMO ketchup and eggless mayo, according to people familiar with the matter.

Rival Nestle on Thursday reported a slowdown in quarterly sales, in line with analyst expectations.

The company noted that sales in Foods, impacted by the later Easter this year, were flat.

With its purchase of Sir Kensington's, Unilever gains a brand that nearly single-handedly pumped life into the condiments business. Nestle, which increased prices 1 percent, was prompted to raise the cost of Nescafe as robusta coffee futures have gained 38 percent in the past year.

Other analysts, however, have been less upbeat on the shares following the results, with Liberum Capital reiterating its "hold" rating on the stock yesterday, with a price target of 3,870p.

"We also expect an improvement in underlying operating margin this year of at least 80 basis points and strong cash flow".

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"The change programme "Connected for Growth" which we started implementing in the autumn a year ago is starting to bear fruit and is making Unilever more agile and closer to the local markets, unlocking both further growth and margin". Distiller Pernod Ricard SA in March lifted the cost of some spirits and wines in the United Kingdom.

Positive aspects of the period for Nestle, the maker of Lean Cuisine meals, included accelerating sales in Europe and Asia, Kepler's Cox said.

Turnover for "Home Care and Personal Care" grew 3.4 % including 2.7 % from higher prices. The ice-cream unit was helped by new products such as chocolate-coated Magnum pints in a tub.

The firm raised its quarterly dividend by 12% to €0.3585 per share, in line with the level pledged in its strategy review, which Polman said reflected confidence in the outlook.

Commenting on the first quarter trading update, Mr Polman said: "The first quarter shows growth once more ahead of our markets".

Excluding the margarine and spreads business, which is to be sold, Unilever's group underlying sales would have risen 3.4 percent.

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