City round-up: Unilever; GB Group; Dechra Pharmaceuticals
Unilever said it had delivered a “good quarter” after releasing figures for the third quarter period, today.
The group operates a key home and personal care manufacturing site at Port Sunlight, Wirral, and a tea making site at Trafford Park in Greater Manchester, which could be sold as part of plans announced in January last year. The plant makes the PG Tips and Lipton brands, and is part of a strategic review by Unilever.
Today’s figures showed underlying sales growth of 2.5% and a four per cent increase in turnover to €13.5bn.
Figures for the nine months trading so far, showed a 4.4% increase in underlying sales growth, and turnover of €39.3bn, a 1.7% improvement.
Chief executive, Alan Jope, said: “We have delivered a good quarter against strong comparators, with underlying sales growth of 2.5%. The combination of our strategic choices and focus on operational excellence continue to drive competitive growth.
“Underlying sales growth is now at 4.4% for the year to date and we are confident that we will be well within our multi-year framework of 3-5% for the full year.
“Our strategic choices are having a positive impact on our growth and business momentum.”
He added: “Cost inflation remains at strongly elevated levels, and this will continue into next year. We have and will continue to respond across our categories and markets, taking appropriate pricing action and implementing a range of productivity measures to offset increased costs.
“We continue to expect that we will deliver in line with our margin guidance of around flat for the full year.”
Danni Hewson, financial analyst at Manchester investment plantform, AJ Bell, said: “Unilever reckons inflation is here to stay. That’s bad news not just for investors in the consumer goods giant but also for central bankers.
“The like of the Federal Reserve will have been hoping inflationary pressures would ease sooner rather than later as they walk the tightrope of keeping prices from overheating while not choking off the recovery by raising interest rates too far and too fast.
“However, given the breadth of costs Unilever is exposed to and the fact that dealing with input costs is bread and butter for a consumer goods company, a warning that inflation will be higher in 2022 carries weight.
“For now Unilever hopes price increases, running at the highest rate in years, will keep margins flat year-on-year, but the company faces its own balancing act of not increasing prices so much that its products are no longer competitive. It is a real test of the strength of the company’s brands.
“After all, will we really stick with branded soap at a materially higher price when there’s an unbranded alternative sitting next to it on the shelf which is an order of magnitude cheaper?
“If enough consumers decide they can put up with a cheaper alternative then it would become a big problem for Unilever.”
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GB Group chief executive Chris Clark
GB Group, the Chester-based identity verification specialist said each of its three business units – location, identity, and fraud – grew in both reported and organic constant currency terms in the first half of the year.
In a trading update for the six months to September 30, it said the long term structural growth opportunities for each of its three business units continue to be supported by consumer activity shifting online and an increased need for fraud prevention solutions.
Total revenue for the first six months is expected to be approximately £109m, which represents an increase of 5.3% over the prior year period. This is before adjusting for exits from its marketing services and employment screening businesses, which gives an increase of 12.4% on an organic constant currency basis.
Adjusted operating profit for the first half is expected to be approximately £27.5m, an increase of three per cent on last year and an adjusted operating profit margin of approximately 25.2%. This is marginally higher than the group had expected.
The company’s balance sheet and cash conversion remains strong with net cash and treasury deposits of £39.5m at September 30, 2021. GBG also has an unutilised revolving credit facility of £110m.
Looking ahead, the board said it remains positive about the long term prospects. Its markets have positive structural growth drivers, it continues to invest in its market-leading technology and data, enjoy long term customer relationships and has an outstanding global team, it said. As a result, the board confirms that the outlook for the second half of financial year 2022 remains in line with its expectations.
Chief executive, Chris Clark, said: “We are pleased with the financial and operational performance over the past six months, particularly considering the conditions many of our customers and teams around the world continue to experience.
“We have made excellent progress against our growth strategy and have continued to support our customers throughout. This progress is testament to the hard work and dedication shown by the GBG team around the world. GBG remains excellently positioned at the forefront of the digital identity software industry.”
The group said it intends to publish its half year results on November 30, 2021.
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Dechra
The board of vet products group Dechra Pharmaceuticals has issued a short trading statement prior to its annual general meeting in Northwich this morning.
It said trading in the first quarter of the financial year was strong, especially in the US as it continued to outperform the sector and benefit from strong growth in the companion animal market.
Although trading is currently encouraging, it remains too early in the year to extrapolate this performance across the full year, the group said.
Dechra , which is based in Northwich, Cheshire, and has a manufacturing site in Skipton, North Yorkshire, will announce its interim results for the six months to December 31, 2021, on February 21, 2022.
