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Under pressure, Unilever has ruled out major takeovers any time soon and announced a new share buyback of up to 3 billion euros, to appease shareholders alarmed by its failed bid to buy the consumer healthcare arm of GlaxoSmithKline .
The company behind Marmite, Dove soap, Hellmann’s mayonnaise and Ben & Jerry’s ice cream told shareholders it got the message it needed to take a “measured” approach.
Presenting its final results for last year, Alan JopeCEO of Unilever, says:
We have been very engaged with our shareholders in recent weeks and have received a strong message that the evolution of our portfolio must be measured.
We therefore do not intend to pursue major acquisitions in the foreseeable future and will conduct a share buyback program of up to €3 billion over the next two years.
Unilever, which has been under pressure to improve its performance, also recorded its fastest underlying sales growth in nine years – up to 4.5% for the full year.
Of this amount, 1.6% came from volume growth, with prices increased by 2.9% as Unilever passed on higher costs to customers.
Jope says inflationary pressures were the main challenge last year, leading to an acceleration in price increases at the end of last year.
The major challenge in 2021 has been the dramatic rise in input costs.
We responded with price action, delivering underlying price growth of 2.9% for the year, accelerating to 4.9% in the fourth quarter, with underlying operating margin down 10 basis points and underlying earnings per share up 5.5%.
Unilever expects underlying sales growth to increase this year, in the range of 4.5% to 6.5%.
Last month, Unilever announced its reorganization around five areas: beauty and wellness, personal care, home care, nutrition and ice cream, with the loss of 1,500 jobs.
Activist investor Nelson Peltz recently built a stake in the troubled FTSE100 company and will push for change.
Jope has also received a much-needed show of support from one of Unilever’s major shareholders, in the bid to buy GSK’s healthcare brands for £50billion.
Fund manager Nick Train of Lindsell Train has suggested the widespread attacks on him are “unfair”, The Times reports this morning:
“We would have been much more disappointed if he [Unilever] had not considered making the acquisition,” he said at Finsbury’s annual meeting.
“It’s a rational asset that Unilever aspires to have. Whether it’s practical at this stage is another matter.
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