City round-up: Unilever; Appreciate Group; In The Style; C4X Discovery Holdings
Consumer goods giant, Unilever, published its first quarter report today which showed underlying sales growth of 7.3%, and an 11.8% increase in turnover to €13.8bn during the three month period.
The group, which operates a key home and personal care manufacturing site at Port Sunlight, Wirral, said its quarterly dividend has been maintained at €0.4268 per share, and the first €750m tranche of an up to €3bn share buyback programme commenced.
It said high input cost inflation has been widespread across its markets and rose further during the first quarter as the war in Ukraine impacted global markets and commodities. While restrictions have been eased in many markets, COVID-19 continues to affect consumers and operations, particularly in countries that have implemented new restrictions and lockdowns.
The group expects the announced sale of its global tea business, which includes a factory in Trafford Park, Greater Manchester making the PG Tips and Lipton brands, to complete in the second half of 2022.
Chief executive, Alan Jope, said: “We are executing well in a very challenging input cost environment. Underlying sales growth of 7.3% was driven by strong pricing, with a limited impact on volume in the quarter. This performance was delivered against the backdrop of significant rises in input costs that have further accelerated through the first three months of the year, and the human tragedy of the war in Ukraine.
“The delivery of another solid quarter of sales growth builds on the improved growth momentum that we achieved in 2021 and is underpinned by Unilever’s increased focus on operational excellence as well as disciplined adherence to our chosen strategic priorities. We are maintaining strong investment in our top brands, growing our thirteen billion+ Euro brands by 8.8% in the quarter. eCommerce sales now represent 14% of turnover following another quarter of strong double-digit growth.
“Our priority markets of the USA, India and China all grew competitively. We continue to reshape our portfolio into high growth spaces, with Prestige Beauty and Functional Nutrition again growing strongly. We remain on track to deliver the previously announced, simpler, more category-focused organisation structure on 1 July 2022.”
He added: “There is more to do as we navigate our business through unprecedented cost inflation, but we are making good progress. We are committed to sustaining this step-up in our growth and competitiveness.”
Russ Mould, investment directore at Manchester investment platform, AJ Bell, said: “The true definition of a company with pricing power is one which can push up its selling prices without dampening demand. Unilever has managed the first bit, but not the second. Each of its three core divisions has seen a drop in sales volumes in its first quarter as a result of raising prices.
“While Unilever talks about another solid quarter of sales growth, pressure on costs means its profit margins aren’t suddenly going to fatten up because people are paying more for a jar of Marmite or a box of Magnum ice creams. In fact, it is guiding for operating margins to be at the bottom end of its previously guided range.”
He added: “In the UK, consumers are starting to trade down to supermarkets’ own-label products because they are cheaper. That presents a real threat to Unilever’s earnings in the near-term if people shun its higher priced items. There is a risk this trend spreads to other geographies.
“The inflationary pressures have taken the spotlight off chief executive Alan Jope for a while, but a resumption of normal trading conditions will inevitably revitalise the debate over whether he is the right man to keep running the business, given poor returns for shareholders under his leadership.”
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Appreciate Group CEO Ian O’Doherty
Appreciate Group, the Liverpool-based gifting and rewards business, formerly Park Group, announced results ahead of expectations, in a trading update for the year to March 31, 2022.
Due to the impact of the coronavirus pandemic, it has used fiscal year 2020 as the primary comparison, the financial period prior to the pandemic, as well as providing 2021 data.
Total group billings were £385.8m, compared with £406.5m in 2020 and £419.9m in 2021.
Year to date total underlying billings were £205.8m, compared with £187.5m in 2021, and £203.8m in 2020.
Year‐end free cash of £19.5m, as at March 31, 2022, compared with £29.6m in 2020 and £31.4m in 2021, reflecting the growth in regulatory billings, which require increased customer monies to be held in trust until redemption.
Chief executive, Ian O’Doherty, said: “I am pleased to report a strong outcome for the year and results ahead of our expectations.
“The benefits of the investments we have made are now being realised in digital and corporate, where our differentiated proposition is particularly strong. We have also made good progress in Christmas Savings and can see opportunities to return this part of our business to growth in the coming years.
“Whilst economic uncertainties remain, particularly following recent rises in the cost of living, our strong Q4 performance provides us with confidence for our prospects for the forthcoming financial year and beyond, and we are well positioned to build on our strong capabilities to capture future growth opportunities.”
The group also announced today, the departure of chief financial officer, Tim Clancy, with effect from the end of July 2022 to take up another opportunity. Tim was appointed to his current role in August 2018. The group is seeking to appoint a replacement CFO as soon as possible to ensure a smooth hand over of responsibilities.
The board expressed its thanks for his significant contribution to the launch of the group’s strategic business plan in 2018 and building a more robust and scalable platform for growth.
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In The Style
Manchester women’s fashion e-tailer, In The Style, has revealed an update on its annual performance in the year to March 31, 2022, that shows its figures will be slightly ahead of forecast.
In its first full year as a public company, In The Style continued to achieve strong year-on-year revenue growth. The group expects, subject to audit, to report revenue of £57.3m, which equates to 28% growth year-on-year and 197% growth on FY20 (FY21: 44.7m; FY20: £19.3m), and is marginally ahead of the guidance issued by the company in January 2022. Adjusted EBITDA margin will be in line with that guidance at 1%.
During the year, In The Style continued to leverage its highly distinctive social-influencer collaboration model, launching collaborations with 27 influencers. This influencer base included both established names such as Jac Jossa and Lorna Luxe along with a number of new influencers including Perrie Sian, Gemma Atkinson and Stacey Solomon, with whom In The Style launched its first ever sustainable collection.
The group attracted, on average, 33,000 new customers a month through FY22 to grow its active customer base. Consumer engagement with the In The Style proprietary app continues to be strong, with more than 850,000 downloads in the year and this contributed to a nine per cent increase in overall order frequency and a 21% increase in average order value year-on-year. After an inconsistent first half, return rates have continued to normalise and were in line with management’s expectations through the second half of the financial year.
The Group continued to grow its reach through new considered wholesale partnerships including Asda, and these have contributed to good growth in its wholesale channel.
Industry-wide challenges in the global supply chain are well documented and, as previously indicated by the group, resulted in pressure on gross margin through 2022.
While macroeconomic pressures are expected to persist over the coming months, the group’s strong brand proposition and resulting pricing power has partially mitigated the impact of cost inflation on gross margin. Management was also encouraged that, for a period in January and February 2022, prior to Russia’s invasion of Ukraine, freight costs somewhat normalised.
The board said it is confident that the execution of the group’s strategic initiatives and the strong pipeline of new influencers will maintain the strong sales momentum achieved during 2022 and improve profitability during 2023.
Chief executive, Sam Perkins, said: “I am pleased to report that In The Style achieved a strong year of revenue and customer growth. This continues to be underpinned by the strength of our inclusive brand and our highly distinctive social-influencer collaboration model, which has the major advantage of creating real engagement with consumers in a cost-effective way. This creates a robust economic model, provides flexibility to respond rapidly to changing consumer trends and, ultimately, positions the group well for sustainable growth.
“Whilst there are macroeconomic challenges facing all retail businesses right now, we are managing our cost base tightly. Given our differentiated proposition and the investments we’ve made in our team, technology and infrastructure during recent periods, In The Style is very well positioned to continue its impressive growth and improve its profitability during FY23.”
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Dr Clive Dix
C4X Discovery Holdings, the Manchester drugs discovery group, said it has made “substantial progress” in its half year ended January 31, 2022.
Unaudited evenue was £66,000, compared with nil income the previous year, although the pre-tax of £5.537m, compared with £4.528m the previous year.
R&D expenses were £3.9m, up from £3.3m, reflecting focused investment in key drug discovery programmes. The business has net assets of £15.2m, down from £19m a year ago, while net cash at January 31, 2022 was £11.7m, a fall from £15.4m the previous year.
Chief executive, Dr Clive Dix, said: “Following the successful out-licensing agreement for our IL-17A inhibitor programme last year, we have continued to make substantial progress across our portfolio with our NRF2 programme now in advanced commercial discussions with multiple partners.
“A strong focal point for the company over the past six months has been to expand our portfolio. The team has analysed over 80 opportunities and selective feasibility studies have led to six new projects entering our portfolio.
“We are applying our rigorous assessment to ensure that each programme is scientifically viable, commercially attractive and has the potential to offer meaningful future returns to our investors. With our next key programme advancing towards partnership, a strong and resilient approach to replenishing the pipeline and having strengthened our leadership during the period, we believe that C4XD is well positioned for ambitious future growth.”
