Obbligazioni societarie Unilever, un player del comparto food

[lorenzo63]

What does it say about the state of the global economy when even Unilever says it is no longer able to provide any guidance on earnings for this year or next?

Soap, shampoo and mayonnaise are usually considered the ultimate defensive goods, the assumption being that people will continue to wash and eat even in a downturn. Yet the giant Anglo-Dutch consumer group says the outlook is too uncertain to forecast ahead.


Getty Images
An employee straightens a row of Dove shampoo bottles, a product of Anglo-Dutch company Unilever, which says its outlook is too uncertain to forecast.
Unilever's problem is that its portfolio largely consists of premium brands such as Ben & Jerry's ice cream and household products such as Dove and Lynx. The risk is that consumers will trade down in favor of own-label products. The U.K. group's fourth-quarter results suggest this is happening already. Sales were up 7.3% on the back of a 9% increase in prices, designed to offset last year's soaring commodity prices. But volumes fell 1.6% in the quarter, leading to a worrying 70 basis points drop in margins.

Unilever is not the only consumer group facing these pressures. Its shares are down 20% from the recent highs in September following the appointment of new Chief Executive Paul Polman. But rivals' shares have plummeted by a similar amount in the past six months. Nestle is down 18% and Danone is down 19%.

Mr. Polman's refusal to provide any guidance on the year ahead is worrying. The former Nestle executive says his strategy is to drive volume growth while still protecting cash and margins. That sounds like a tall order. And with no clear indication of how he will achieve that and no benchmark by which to measure the company's success, Mr. Polman may find restoring investor confidence is just as big a challenge.

 

[lorenzo63]

Unilever

LONDON -- Higher prices drove consumer-products giant Unilever to a big jump in fourth-quarter profits, but new Chief Executive Paul Polman declined to give an earnings forecast for 2009 and 2010, saying the economic crisis made such predictions "inappropriate."


Reuters
Flora margarine, a brand owned by Unilever, at a London supermarket
At the same time, Mr. Polman signaled a strategic shift is at hand just a month after he took over. Mr. Polman said Unilever would make volume sales a bigger priority, a move that suggests he doesn't believe the company can continue to rely on price increases to drive revenue as the recession proceeds.

Unilever's fourth-quarter net profit jumped 51% to €1.19 billion ($1.53 billion), driven in part by the decision by Mr. Polman's predecessor, Patrick Cescau, to push through price rises of more than 9% even as the economic crisis swept the world. Other factors included asset sales, including the sale of its Bertolli olive-oil unit.

Fourth-quarter revenue rose 3% to €10.2 billion. Underlying sales growth was up 7.3%, a big jump and higher than analysts' expected. For the year, Unilever's net profit rose 28% to €5.3 billion and revenue rose 1% to €40.5 billion.

While boosting profits, Unilever's price hikes drove away customers. Unilever sold 1.6% fewer items in the quarter. Other big food companies also pushed through price increases last year in response to rising commodity prices, although few were as aggressive as Unilever.

Mr. Polman, who became chief executive officer Jan. 4, said Unilever would now prioritize selling more items, known as volume growth, over what the industry calls "underlying sales growth," or sales adjusted for the affects of currency changes, acquisitions and divestments.

The strategy shift suggests Mr. Polman believes Unilever needs to sell more items, and concentrate on making more popular foods, bathroom products and other items. Unilever owns the Magnum, Dove and Knorr brands, among others. Mr. Polman declined to comment on future price rises.

"The first thing we will do is to protect our volumes," he said at a press briefing in London. "We can do that without compromising our operating cash flow and margins."

Unilever's profit increase was partly overshadowed by Mr. Polman's decision not to tell analysts how much he expects the company to make in 2009 and 2010.

The move may lift some of the pressure on Mr. Polman to deliver good results during the recession. But it worried investors, who fear Unilever may be suffering more from the financial crisis than previously thought. Unilever shares fell 6.5% in London trading.

Until Thursday's announcement, the company's shares had fallen only 11% over the previous 12 months as investors bet that people would continue to buy the company's low-priced products during the recession.

"No 2009 guidance hardly instills confidence in the business looking forward to 2009," Sanford Bernstein analyst Andrew Wood said in an email.

A Dutch national and former top executive at Nestle SA and Procter & Gamble Co., Mr. Polman is the first Unilever CEO from outside the company.

Some of the first details of his strategy emerged Thursday as he briefed journalists and analysts. He has introduced a pay freeze for all managers and cut the 2009 travel budget by 30%. A plan announced in 2007 to close 60 or 70 factories by 2010 may be accelerated by a year.

The financial crisis will force Unilever to become more efficient, Mr. Polman said. "I am very pleased it's here," he said.

Unilever will no longer target an increase in profit margins to 15.8% by 2010 from 14.6% in 2008, Chief Financial Officer Jim Lawrence said at the briefing. Chasing the target could make the company sacrifice other goals, such as increasing volume, a spokesman said.

 

[lorenzo63]

Bravo Mark..Te lo stavo scrivendo .. ma come ho letto da qualche parte leggi e scrivi alla velocità della luce ... io invece sbadiglio pensando all' aereo di domani

 

[Imark]

Outlook negativo per il comparto food negli USA secondo Moody's ... a rischio sia i prodotti di marca (packaged food) per effetto del rallentamento economico che l'export di commodities alimentari nei paesi emergenti.

[FONT=verdana,arial,helvetica]Moody's: Negative Outlook For U.S. Food Industry Worsens[/FONT]

[FONT=verdana,arial,helvetica]New York, February 02, 2009 -- The negative outlook for the US food industry has worsened in the past six months because of concerns that the global economic downturn may reduce demand for certain brand-name foods and may slow U.S. meat exports to emerging markets, says Moody's Investors Service. [/FONT]

[FONT=verdana,arial,helvetica]"As consumers struggle with rising unemployment and an uncertain economy, they are bound to cut spending where possible," says Moody's VP-Senior Credit Officer Elaine Francolino. [/FONT]

[FONT=verdana,arial,helvetica]This outlook expresses Moody's expectations for the fundamental credit conditions for the food industry over the next 12 to 18 months. [/FONT]

[FONT=verdana,arial,helvetica]The rated universe of the US food industry is comprised of two segments says Moody's: the packaged-food companies -- that sell processed food to food-service companies, grocery stores and other food retailers -- and the meat processors -- companies that sell chicken, beef, pork and other agricultural commodities to food-service companies, grocery stores, and packaged food companies. [/FONT]

[FONT=verdana,arial,helvetica]"Most food producers have significant fixed costs," notes Francolino, "hence a drop in sales volume is likely to hurt profitability and cash flow." [/FONT]

[FONT=verdana,arial,helvetica]In addition, the tight credit markets intensify problems for lower-rated packaged-food companies and especially for meat producers. "The lack of access to credit may make more bankruptcy filings possible," says Francolino. [/FONT]

[FONT=verdana,arial,helvetica]However, although sales of branded packaged-food companies could come under stress as strapped consumers trade down from national brands to cheaper private-label versions, there are pockets of strength, says the analyst. "For example, leading cereal brands have not yet lost material market share to store brands." [/FONT]

[FONT=verdana,arial,helvetica]Overall, the outlook for the food sector has grown more pessimistic as many commodities are still expensive on a historical basis and the economic downturn is likely to hurt operating profits, says Moody's. Thus any relief from input price inflation -- from lower crude-oil prices, for example -- will probably only offset lower operating profits caused by the economic slowdown. [/FONT]