I like to track the progress of my holdings. The best way to do this is by following the quarterly results of the companies. It’s not that I will sell a company when it has not so good results, but it gives me a general idea of the direction in which the company is going and what I can expect in the immediate to mid long term. Today my view on the Unilever half year results
Unilever, my Dutch food giant, operates in the defensive consumer goods branch. The company is doing very good recently which is also the reason why I bought shares of the company earlier this year. Today they reported the 2nd quarter and with that, the half year results of 2016.
All in all, the results look pretty good. The underlying sales growth is 4,7% compared to the first half of 2015. The volume grew by 2,2%. The volume growth is something that I really value. It means that Unilever is going the right way, even if the figures tell something different due to things like currency exchange rates. And those currency exchanges do have a negative impact on the results. The revenue declined by 2,6%. However, when you filter currency exchange rates out we see that the revenue actually grew by 5,4%.
Unilever did particularly well in emerging markets. The underlying sales growth there is 8,0% with volume up 2,9%. The emerging markets is something Unilever targets very well lately. Most of its growth comes from those markets and I expect that there is much more possible for Unilever in the near future.
The operating margin also grew with 50bps to 15%. This was caused by a gross margin increase of 80bps.
All this results in EPS that are up 1,3%. Corrected for currency exchange rates the growth is 7,5%.
All in all the first half of 2016 looks really good compared to the first half of 2015. However, I expect that most of the work that is done now will really show up once the currency exchange rates turn into Unilevers favor. If they have the same underlying growth and currency exchange rates are positive, then that will result in some big changes to EPS. Also, if they continue to produce results like this for the rest of the year, then I believe we can expect a dividend increase of 6 to 7% in the beginning of next year. That would be awesome!
What do you think of the first half of 2016 for Unilever? How do you think about the company? Do you have it in your portfolio and are you happy with its results? Don’t hesitate to share your opinion in the comments below!