After nearly becoming one of the largest takeover targets in history, Unilever delivered growth ahead of its markets in what CEO Paul Polman called a “solid start” to the year.
A steady dividend grower, Unilever has been a popular holding of equity income managers like Evenlode’s Hugh Yarrow, whose fund has an 8.56% share in the company.
If the consumer giant had accepted the $143bn (£112bn) bid from Kraft Heinz, it would have been a major headache for income seekers like Yarrow.
But equally, narrowly escaping the takeover bid meant Unilever had something to prove to shareholders in this update.
“Having just fended off a takeover attempt from Kraft Heinz, which led to a Strategy Review promising faster growth and higher dividends in future, Unilever were never going to issue any nasty surprises today,” said Hargreaves Lansdown senior analyst Laith Khalaf.
Hargreaves Lansdown Select Equity funds manager Steve Clayton agreed that the takeover threat from Kraft Heinz pushed the Dutch-British consumer company “into a more radical pace and scale of change than they had originally chosen for themselves.”
Unilever is the largest position in both the HL Select UK Shares fund and newer HL Select UK Income Shares fund, both overseen by Clayton.
Over the first quarter, the group saw underlying sales growth of 2.9%, though, that was thanks to 3% higher pricing, with volumes down 0.1%.
Unilever’s sales growth in emerging markets continued to outpace developed markets, delivering growth of 6.1% versus -1.5% growth.
Though Clayton feels “trading is still at the sluggish end of the dial,” he thinks the group has “enormous potential to steadily boost returns whilst compounding sales over time.”
