Unilever reports $1 billion net profit at half year.
SECOND QUARTER HALF YEAR
13,893 million +9% Turnover 26,026 million +8% 1,075 million -5% Operating Profit 1,965 million +2%
972 million -6% Pretax Profit 1,776 million --%
571 million -12% -- constant rates 1,073 million -4%
555 million -15% -- current rates 1,046 million -7%
EARNINGS PER SHARE
per Fl. 4 of ordinary
$1.97 -15% capital (NYSE:UN) $3.72 -7%
per 20p of ordinary
$1.18 -15% capital (NYSE:UL) $2.23 -7%
RESULTS: Quarter 2 and the half year were affected more than usual by a negative swing in net exceptional items -- $168 million and $212 million respectively. Excluding these, operating profit improved by 10% in the quarter and 13% in the half year.
BUSINESS PERFORMANCE: The trading environment in the various parts of the world in which Unilever operates remained substantially unchanged. In Europe sales levels were maintained in the face of weaker demand in certain key markets. Conditions were more favorable in North America where businesses responded well. In the rapidly growing emerging markets, sales growth generally out-performed the underlying economies.
OUTLOOK: Chairman Sir Michael Perry comments: "Turnover growth is expected to develop at a rate similar to that of the first six months. Excluding net exceptional charges, the positive margin development should be sustained.
"Net exceptional charges in 1996 are expected to be in line with the average of previous years and therefore the charges in the second half of the year will be lower compared to the second half of last year. Reported profits for the year should therefore be ahead of 1995."
UNILEVER RESULTS Second Quarter and Half Year 1996
Embargoed: Not for publication or broadcast before 0300 hrs, Friday August 9, 1996
The directors of Unilever announce the Group's consolidated results for the second quarter and half year 1996:
At constant rates of exchange sales increased by 8% to US $26,026 million over the corresponding period of last year. Operating profit rose by 2% to US $1,965 million. Before exceptional charges operating profit improved by 13%.
In the half year, net exceptional charges within operating profit were US $170 million, compared with a positive net exceptional gain of US $42 million in the first half of 1995. The planned restructuring costs in newly acquired businesses, notably Helene Curtis, account for US $94 million of the costs charged to operating profit this half year (1). The balance of US $76 million relates to restructuring in our existing operations and includes the costs on disposal of low margin businesses.
Net profit decreased by 4% to US $1,073 million, with interest and tax costs higher than last year.
At exchange rates current for each period, net profit fell by 7% in US dollars and by 3% in both sterling and guilders.
The trading environment in the various parts of the world in which we operate remained substantially unchanged. In Europe sales levels were maintained in the face of weaker demand in certain key markets. Conditions were more favorable in North America where our businesses responded well. In the rapidly growing emerging markets, sales growth generally out-performed the underlying economies.
In Europe overall sales were flat. Underlying margins improved further in personal products and in our foods business. This improvement was due to cost reductions and portfolio rationalization, as we disposed of low margin businesses, primarily in meat. Reported profits were unchanged despite the continuing impact of the BSE affair, the costs of ongoing restructuring and losses on disposals.
Highlights included sales growth in beverages and prestige fragrances. In fabric detergents our position remained difficult in declining markets. In specialty chemicals there were signs of strengthening demand.
(1) Prior to 1995, acquisition restructuring costs were charged against profit retained in the balance sheet as part of the goodwill write-off. Last year, there were no material restructuring costs following acquisitions.
In North America a number of factors contributed to the increase in sales. Most significant were the contributions of the acquired businesses, Helene Curtis, Diversey and Gortons. As anticipated, the action taken in our beverages and culinary operations at the end of last year to reduce stocks in the trade had a positive effect on sales in the first half of 1996. Sales increased in margarine, fabric detergent liquids and personal wash.
The reported improvement in profits reflects increases in margarine and detergents and the benefit from the elimination of year-end trade loading in foods. Margins improved, despite the short term effect of restructuring charges in Helene Curtis, as a result of cost reduction programs.
In Africa and Middle East sales increased, led by detergents and a good contribution from our newly acquired businesses. Profit growth was modest. Market conditions improved in the region towards the end of the period.
Asia and Pacific recorded sales growth in all categories, particularly in India, Indonesia and China. Profits grew most strongly in detergents and personal products but this progression was more than offset by post acquisition restructuring costs for the local Helene Curtis operations and continuing investment in new markets.
In Latin America sales growth was excellent and widespread across the region. The performance of our Brazilian business was particularly noteworthy. Profits in ongoing businesses improved faster than sales. Reported profits included a loss on the disposal of an oil milling business in Brazil.
At constant rates of exchange sales improved 9% to US $13,893 million over the corresponding quarter last year. Operating profit fell 5% to US $1,075 million.
In the quarter, net exceptional costs of US $146 million were charged to operating profit compared with a net positive exceptional gain of US $22 million in the second quarter of last year. Before exceptional charges, operating profit improved by 10%.
Net profit of US $571 million, expressed at constant rates of exchange, was 12% lower than in the corresponding period last year.
At exchange rates current for each period, net profit was 15% lower in US dollars, 11% lower in sterling and 9% lower in guilders.
Turnover growth is expected to develop at a rate similar to that of the first six months. Excluding net exceptional charges, the positive margin development should be sustained.
Net exceptional charges in 1996 are expected to be in line with the average of previous years and therefore the charges in the second half of the year will be lower compared to the second half of last year. Reported profits for the year should therefore be ahead of 1995.
The relative exchange rates of our reporting currencies in the first six months remained fairly stable. Assuming this situation continues, the overall impact of exchange rate movements on our results for the year will be limited.
BALANCE SHEET AND CASH FLOW
The main movement in the balance sheet over the half year is the increase in net debt by US $1,875 million (1995: US $1,369 million) to US $4,810 million. This is due to the seasonality of the business, reaching a peak at mid year, to the payment of the final dividend in May and to acquisitions. Net gearing has risen from 24% at the end of 1995 to 35% for the half year. The position at the end of June 1995 was 30%. The higher gearing is explained by increased acquisition expenditure.
Total capital and reserves decreased by 3% in the half year to US $8,483 million after a net goodwill write off on acquisitions and disposals of US $916 million, partly compensated by currency movements.
Net cash inflow from operating activities, at US $1,894 million, was US $608 million above the same period of 1995, largely due to lower working capital outflows. This gain was more than offset by higher outflows on investing activities, notably on acquisitions.
CONSOLIDATED PROFIT AND LOSS ACCOUNT (unaudited)
Second Quarter US $ millions Half Year
Incr. / Incr./ 1996 1995 (Decr.) 1996 1995 (Decr.)
13,893 12,712 9 % TURNOVER 26,026 24,054 8 %
1,075 1,132 (5)% OPERATING PROFIT 1,965 1,932 2 %
8 9 Income from fixed 20 20
(111) (104) Interest (net) (209 (185)
972 1,037 (6)% PROFIT BEFORE TAXATION 1,776 1,767 - %
(370) (363) Taxation (651) (605)
602 674 (11)% PROFIT AFTER TAXATION 1,125 1,162 (3)%
(31) (26) Minority Interests (52) (39)
NET PROFIT AT CONSTANT
571 648 (12)% 1995 EXCHANGE RATES 1,073 1,123 (4)%
NET PROFIT AT EXCHANGE
RATES CURRENT IN EACH
555 652 (15)% PERIOD 1,046 1,127 (7)%
$ $ COMBINED EARNINGS PER SHARE $ $ 1.97 2.33 (15)% per Fl. 4 of ordinary capital 3.72 4.02 (7)% 1.18 1.39 (15)% per 20p of ordinary capital 2.23 2.41 (7)%
US $ millions
CONDENSED BALANCE SHEET (unaudited)
As at 30 As at 31
Fixed assets 13,740 13,753 Stocks 6,974 6,665 Debtors 8,478 7,336 Trade & other creditors (10,281) (10,403)
Total 18,911 17,351
Net debt 4,810 2,935 Provisions for liabilities and charges 5,054 5,129 Minority interests 564 558 Capital and reserves 8,483 8,729 Total 18,911 17,351
CASH FLOW STATEMENT (unaudited)
NET CASH INFLOW FROM OPERATING ACTIVITIES 1,894 1,286
Dividends from fixed investments 18 10
Interest paid less received (206) (242)
Dividends paid (766) (727)
NET CASH OUTFLOW FROM RETURNS ON INVESTMENT AND SERVICING OF FINANCE (954) (959)
TAXATION (469) (495)
Capital expenditure less disposals (690) (788)
Acquisition and disposal of Group Companies (1,510) (597)
Other investing activities (209) 115
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (2,409) (1,270)
NET CASH OUTFLOW BEFORE FINANCING (1,938) (1,438)
NET CASH INFLOW FROM FINANCING 684 220
DECREASE IN CASH AND CASH EQUIVALENTS (1,254) (1,218)
US $ million
Second Quarter Half Year
1996 1995 1996 1995
6,926 6,797 Europe 12,919 12,733 2,784 2,336 North America 5,107 4,430
841 721 Africa and Middle East 1,644 1,442 2,019 1,682 Asia and Pacific 3,794 3,277 1,323 1,176 Latin America 2,562 2,172
13,893 12,712 Total 26,026 24,054
643 635 Europe 1,042 1,036
149 169 North America 310 253
62 55 Africa and Middle East 120 115
107 169 Asia and Pacific 252 304
114 104 Latin America 241 224
1,075 1,132 Total 1,965 1,932
% % Operating Margin % %
9.3 9.3 Europe 8.1 8.1
5.3 7.2 North America 6.1 5.7
7.3 7.7 Africa and Middle East 7.3 8.0
5.3 10.0 Asia and Pacific 6.6 9.3
8.7 8.8 Latin America 9.4 10.3
7.7 8.9 Total 7.5 8.0
Acquisitions and Discontinued Operations
In the first half of 1996 the effect on turnover and operating profit of acquisitions made in the period was US $713 million and US $(65) million respectively. There were no discontinued operations in the first half of 1996 or 1995.
The condensed balance sheet as at December 31, 1995 has been extracted from the full Group Accounts, on which the auditors gave an unqualified opinion, and which have been delivered to the Registrar of Companies.
The results for 1996 and the comparative figures for 1995 have been translated at constant average rates of exchange, being the annual average rates for 1995. For our reporting currencies these were 1 Pound = 2.53 Fl. = 1.58 US Dollars. In addition the net profit, earnings per share and Cash Flow statement have been translated at the average rates current in each period. For our reporting currencies these were :
1996 1 Pound = 2.59 Fl. = 1.53 US Dollars 1995 1 Pound = 2.52 Fl. = 1.60 US Dollars
1996 1 Pound = 2.56 Fl. = 1.53 US Dollars 1995 1 Pound = 2.56 Fl. = 1.59 US Dollars
The balance sheet figures have been translated at period-end rates of exchange. For our reporting currencies these were 1 Pound = 2.65 Fl. = 1.55 US Dollars at the half year 1996 (December 31, 1995: 1 Pound = 2.49 Fl. = 1.55 US Dollars).
The results for the third quarter and announcement of interim dividends for 1996 will be published on Friday November 8, 1996.
August 9, 1996
CONTACT: Unilever, New York
John T. Gould Jr., 212/906-4694
|Printer friendly Cite/link Email Feedback|
|Date:||Aug 9, 1996|
|Previous Article:||COMPTRONIX CORPORATION FILES FOR CHAPTER 11; REPORTS SECOND QUARTER RESULTS.|
|Next Article:||Transtar Holdings L.P. reports second quarter earnings.|