UNILEVER Shares Rated SELL After Release of Q3’15 Result


Wednesday, October 28, 2015 03:50PM / InvestmentOne Research              

Q3 2015 result highlights 

  •   Marginal q/q improvements in revenue
  •   Y/y performance still lagging corresponding period in 2014
  •   Marked improvements in q/q margins

Unilever plc published its Q3 2015 results that showed a marginal sequential improvement from its uninspiring Q2 2015 performance.

While revenue of c.N13.9bn rose by c.1.2% q/q, gross profit of c.N5.1bn improved much more, up by c.9.1% q/q. In terms of margins, gross profit margin of c.36.6% and pre-tax margin of c.0.8% were up by c.263bps and 635bps q/q respectively.

We note the impact of c.300bps q/q contraction in opex/sales. These combined to deliver a q/q PBT and PAT growth of c.113% and 11% respectively.

Year-on-year, we highlight that the result is still markedly far from the corresponding period’s performance in 2014.

Both revenue and PAT showed c.2.6% and 84% y/y weakness respectively. Margin-wise, GPM and pre-tax margin came in slightly lower by c.0.8bps and 0.1bps respectively.

We continue to highlight Unilever’s premium positioning of its brands and its less diversified portfolio of product as a challenge in the face of macro headwinds that has seen contraction in disposable income and slowdown in overall economic output.

We expect performance to remain muted over the next four quarters.

Our models are under review. We rate Unilever shares SELL.

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