LONDON BRIEFING: Newly Unified Unilever Sets Out Growth Ambitions

(Alliance News) - Consumer products giant Unilever said Thursday it delivered a strong set of ...

Alliance News 4 February, 2021 | 8:21AM
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(Alliance News) - Consumer products giant Unilever said Thursday it delivered a strong set of annual results under the most difficult of circumstances brought about by the coronavirus pandemic, while also setting out a plan for growth.

Unilever shares were down 3.9% at 4,168.00 pence early Thursday.

For 2020, Unilever posted revenue of EUR50.72 billion, down 2.4% from USD51.98 billion in 2019, just missing forecasts of EUR50.81 billion.

Underlying operating profit was EUR9.34 billion in 2020, down from EUR9.94 billion in 2019. The Anglo-Dutch company posted underlying sales growth of 1.9%.

Unilever declared a quarterly dividend of EUR0.4268, which it noted was up 4%. This is about 37.7 pence.

Looking ahead, Unilever said it would aim for underlying sales growth ahead of its markets, delivering growth in the range of 3% to 5%, as well as profit growth ahead of sales growth.

CEO Alan Jope said: "We progressed our strategic agenda, building on our existing sustainability commitments with ambitious new targets and actions, most recently with our plans to help build a more equitable and inclusive society. We completed the unification of our legal structure under a single parent company and we continue to work on separating out the tea business as we evolve our portfolio.

"Today we are setting out our plans to drive long-term growth through the strategic choices we are making and outlining our multi-year financial framework. While volatility and unpredictability will continue throughout 2021, we begin the year in good shape and are confident in our ability to adapt to a rapidly changing environment."

Other elements of Unilever's plan is to develop its product portfolio into "high growth spaces". It also will push harder to grow in the US, India and China, from which 35% of it turnover already comes.

Unilever said it make restructuring investment of EUR1 billion in each of 2021 and 2022, with this reducing thereafter. It is aiming for EUR2 billion per annum of savings from its established 'Fuel for Growth' effort.

It is targeting return on invested capital in the mid-to-high teens and a ratio of net debt to underlying earnings before interest, tax, depreciation and amortisation of about 2 times.

Back in November, Unilever completed the unification of its group legal structure into a single parent company headquartered in the UK but still listed in Amsterdam, New York and London.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 0.4% at 6,530.66

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Hang Seng: down 0.7% at 29,101.74

Nikkei 225: closed down 1.1% at 28,341.95

DJIA: closed up 36.12 points, or 0.1%, at 30,723.60

S&P 500: closed up 3.86 points, or 0.1%, at 3,830.17

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GBP: down at USD1.3598 (USD1.3651)

EUR: down at USD1.2003 (USD1.2022)

Gold: down at USD1,825.03 per ounce (USD1,835.90)

Oil (Brent): up at USD58.94 a barrel (USD58.64)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Thursday's Key Economic Events still to come

0930 GMT UK CIPS-Markit construction purchasing managers' index

1100 GMT Ireland industrial production and turnover

1200 GMT UK Bank of England interest rate decision

1200 GMT UK BoE quarterly monetary policy report

1300 GMT UK BoE Governor Andrew Bailey press conference

1100 CET EU retail sales

0730 EST US challenger job-cut report

0830 EST US preliminary productivity and costs

0830 EST US initial jobless claims

1030 EST US EIA weekly natural gas storage report

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Former European Central Bank chief Mario Draghi urged Italy's splintered parties Wednesday to get behind him as he tries to form a new government and lift his country out of the devastation of the coronavirus pandemic. After receiving a mandate from President Sergio Mattarella to open talks on a national unity government, Draghi stressed the urgency of resolving the political chaos at such a "difficult moment". There has been no fully functioning government in Rome for weeks, as Giuseppe Conte's ruling coalition slowly collapsed in a row over the handling of Covid-19 and the resulting deep recession.

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BROKER RATING CHANGES

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DEUTSCHE BANK CUTS GLAXOSMITHKLINE TO 'SELL' (HOLD) - PRICE TARGET 1150 (1400) PENCE

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ODDO BHF RAISES RELX TO 'OUTPERFORM' (NEUTRAL)

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JEFFERIES RAISES PRUDENTIAL TO 'BUY' (HOLD) - PRICE TARGET 1450 (1455) PENCE

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GOLDMAN SACHS RAISES ASOS PRICE TARGET TO 6,500 (5,800) PENCE - 'BUY'

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COMPANIES - FTSE 100

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Shell swung to an annual loss in a year when the Covid-19 pandemic hit energy consumption. Brent oil was quoted at USD58.90 a barrel Thursday morning, up from USD58.64 at the London equities close Wednesday. The North Sea benchmark was trading around USD68 a barrel at the start of 2020, but collapsed to a low of USD15.97 in April due to the global economic impact of the virus and a Russia-Saudi Arabia output war later resolved. For 2020, Shell swung to a loss attributable to shareholders of USD21.68 billion from a profit of USD15.84 billion in 2019. Adjusted earnings were USD4.84 billion, down 71% from USD16.46 billion - missing consensus forecasts for USD5.05 billion. For the fourth quarter alone, Shell swung to a loss attributable to shareholders of USD4.01 billion from a USD965 million profit in 2019. Free cash flow for 2020 was USD17.63 billion, down 12% from USD20.1 billion in 2019. Net debt increased by USD1.9 billion to USD75.4 billion in the fourth quarter, hurt by lower free cash flow, including a small working capital outflow. Shell slashed its fourth quarter payout 65% to USD0.1665 from USD0.4700. Its annual dividend was down 65% to USD0.6530. Shell expects its first quarter 2021 dividend to be USD0.1735. Looking ahead to the first quarter, Shell said production was expected in a range between 900,000 to 950,000 barrels of oil per day. "2020 was an extraordinary year. We have taken tough but decisive actions and demonstrated highly resilient operational delivery while caring for our people, customers and communities. We are coming out of 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy. We are committed to our progressive dividend policy and expect to grow our US dollar dividend per share by around 4% as of the first quarter 2021," said Chief Executive Officer Ben van Beurden.

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COMPANIES - GLOBAL

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SoftBank Group said its performance improved in the first nine months of its current financial year. The Tokyo-based company which owns stakes in many technology, energy, and financial companies said revenue for the nine months to the end of 2020 rose by 5.2% when compared to the prior year to JPY3.807 trillion. Pretax profit, meanwhile, increased by 2.3% to JPY746.20 billion. Operating income was 5.8% higher than a year earlier, at JPY841.58 billion. Net income rose by 3.5% to JPY485.50 billion.

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Basel, Switzerland-based pharmaceutical group Roche Holdings reported a stronger performance for 2020, with profit rising despite a drop in sales. For the year, Roche posted net income of CHF15.07 billion, around USD20.07 billion, which reflects a 7% rise from CHF14.11 billion the year before, due to a drop in goodwill write-offs. Diluted earnings per share however was down 5% year-on-year at CHF19.16 from CHF20.16. Group sales however, declined by 5% to CHF58.32 billion from CHF61.47 billion in 2019, which Roche attributed to the continued appreciation of the Swiss franc against most currencies. At constant exchange rates however, sales rose by 1%.

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Thursday's Shareholder Meetings

Compass Group PLC - AGM

DCC PLC - GM re replacement of CREST system

Hostelworld Group PLC - GM re changes to borrowing limit

Microsaic Systems PLC - GM re share placing

Octopus Renewables Infrastructure Trust PLC - GM re investment policy changes

Sage Group PLC - AGM

Stock Spirits Group PLC - AGM

Ten Lifestyle Group PLC - AGM

Yew Grove REIT PLC - EGM re migration from CREST

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
GlaxoSmithKline PLC 1,388.00 GBX -1.84
ASOS PLC 3,265.00 GBX -2.39
RELX PLC 2,195.00 GBX -0.90
Unilever PLC 3,990.00 GBX -0.03
Prudential PLC 1,392.00 GBX 0.14

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