Unilever strongly beats first quarter sales forecast

Paul Polman Unilever CEO

Paul Polman Unilever CEO

Unilever (UL) and Nestle (NSRGY) hinted at slowing growth in USA markets Thursday even as the two brand giants posted better-than-expected first sales updates and improving price dynamics.

The consumer goods giant's shares have been on the rise since February when it rejected a takeover bid from Kraft Heinz (KHC.O) which impelled the company into a comprehensive review of its business.

Underlying sales-which strip out the impact of foreign exchange volatility-grew by 2.9%, beating analyst estimates for growth of 2%.

"The change programme "Connected for Growth", which we started implementing in the autumn past year, is clearly bearing fruit and is making Unilever more agile and closer to the local markets, unlocking both further growth and margin", Polman said.

Global food companies have been struggling with anaemic economic growth in many key markets amid changing and health-conscious lifestyles.

Unilever has said higher prices increased its sales in the first three months of the year. They show turnover of €4.7 billion, with underlying sales growth across the rest of its food and refreshment portfolio of 3.5%.

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Unilever said its quarterly interim dividend for United Kingdom shares will be 30.21p per share, a rise of 12% year-on-year. And, excluding this unit, Unilever's underlying sales were 3.4%.

CEO of Unilever Paul Polman said the overall report "reflects our continued investment in both innovations and brand support, and reconfirms the strength of our long-term sustainable compounding growth model". Volumes fell, trimming 0.1 percentage point off Unilever's underlying sales growth.

Earlier this month, it announced the sale of its margarine division to butter up investors, many of whom had voiced concern over the rejection of the proposed tie-up with Kraft.

"It's a solid kick-off, with ice-cream's very strong finish to the quarter as the sun was shining in Europe", chief financial officer Graeme Pitkethly said.

The company did not provide any immediate update on plans to divest its spreads unit, which includes the Flora brand.