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Under-pressure Unilever has ruled out making major takeovers any time soon, and announced a new share buyback up to €3bn, to placate shareholders alarmed by its botched attempt to buy GlaxoSmithKline’s consumer healthcare arm.
The firm behind Marmite, Dove soap, Hellmann’s mayonnaise and Ben & Jerry’s ice-cream told shareholders that it has got the message that it must take a ‘measured’ approach.
Reporting its final results for last year, Alan Jope, Unilever’s chief executive officer, says:
We have engaged extensively with our shareholders in recent weeks and received a strong message that the evolution of our portfolio needs to be measured.
We therefore do not intend to pursue major acquisitions in the foreseeable future and will conduct a share buyback programme of up to €3 billion over the next two years.”
Unilever, which has faced pressure to improve its performance, has also reported its fastest underlying sales growth for nine years – up 4.5% for the full year.
Of that, 1.6% came from volume growth, with prices hiked by 2.9% as Unilever passed on rising costs to customers.
Jope says that inflationary pressures were the main challenge last year, leading to an acceleration of price rises at the end of last year.
The major challenge of 2021 has been the dramatic rise of input costs.
We responded with pricing actions, delivering underlying price growth of 2.9% for the year, accelerating to 4.9% in the fourth quarter, with full year underlying operating margin down 10bps and underlying earnings per share up 5.5%.
Unilever expect underlying sales growth to rise this year, to a range of 4.5% to 6.5%.
Last month Unilever announced it would reorganise around five areas: beauty & wellbeing, personal care, home care, nutrition and ice-cream, with 1,500 jobs being cut.
Activist investor Nelson Peltz has recently built a stake in the troubled FTSE 100 company, and will be pushing for change.
Jope has also received a much-needed show of support from one of Unilever’s largest shareholders, over the attempt to buy GSK’s healthcare brands for £50bn.
Top fund manager Nick Train of Lindsell Train suggested the widespread attacks on him were “unfair”, The Times reports this morning:
“We would have been a lot more disappointed if it [Unilever] had not considered making the acquisition,” he said at Finsbury’s annual meeting.
“That is a rational asset for Unilever to aspire to own. Whether it is practical at this juncture is another matter.”
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