Unilever lifts its full-year margin target after seeing a big improvement in the first half, underlying its ability to boost returns as an independent firm after rebuffing a $143 billion takeover bid earlier this year. Ciara Lee reports.
They produce ice cold treats. But things at Unilever are hotting up. The maker of Hellman's mayonnaise and Dove soap has lifted its full-year margin target after big gains in the first half of the year. Profit margins became an area of investor scrutiny in February when an aborted $143 billion takeover bid from Kraft Heinz forced Unilever into a business review. (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "It's a positive outcome for a positive stocks story. Unilever shares are up 31 percent this year which is a cracking result for shareholders. And really the response to the threatened takeover by Kraft earlier in the year has been the trigger for much more aggressive strategy on both margins and product development from Unilever, and shareholders welcome that. This is good news." The Anglo-Dutch conglomerate expects underlying operating margin to grow by at least 100 basis points this year. Its previous target was around 80. The firm has accelerated its cost-saving and productivity programmes, and lowered its brand and marketing spending. Underlying sales rose 3 percent in both the second quarter and the first half, excluding currency fluctuations and acquisitions. Unilever shares rose on the news, but some analysts voiced concern that the improvement was largely driven by reduced marketing spending... which can hit sales.