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Unilever reports drop in quarterly turnover in wake of scrapping Dutch relocation plan

Unilever earlier this month abandoned plans to move its headquarters from London to Rotterdam after bowing to pressure from institutional investors

The company continues to expect underlying sales growth of 3% to 5% for the year

Unilever plc (LON:ULVR) posted a 4.8% decline in third-quarter turnover, reflecting the impact of unfavourable foreign exchange rates and the disposal of its spreads business. 

The FTSE 100 consumer goods company, which earlier this month abandoned plans to move its headquarters from London to Rotterdam following pressure from institutional investors, said sales for the three months to September fell to €12.53bn from €13.17bn last year.

On an underlying basis, excluding the impact of disposals, acquisitions and currency, sales increased 3.8% with growth across all three divisions – beauty and personal care, home care, and foods and refreshment. Prices increased 1.4% and volumes gained 2.4%.

"It’s encouraging to see underlying sales move in the right direction, with both volumes and pricing contributing to performance," said George Salmon, equity analyst at Hargreaves Lansdown.

"However, while these results are solid enough, they’re not quite the stellar showing investors would have been looking for.”

The maker of Marmite, Ben & Jerry’s ice cream and Dove soap completed the disposal of its spreads businesses, which includes household names Flora and I Can’t Believe It’s Not Butter, to private equity house KKR for £6bn in July.

READ: Unilever executive tells MPs shareholder communication “could improve”

The disposal was part of an effort to overhaul the group after turning down a £115bn takeover from Kraft Heinz.

In March Unilever announced a plan to switch from two legal entities into a single one, incorporated in Rotterdam, after reviewing the business and deciding it needed to simplify its dual structure.

Many shareholders said they would vote against the move over worries that once Unilever moved to the Netherlands, it would have been ejected from the FTSE 100, forcing funds that track the index and funds that buy only UK stocks to sell their shares.

Following an outcry from investors, Unilever said it would no longer move to Rotterdam and would consider its next steps.

Unilever did not touch on the issue again in its third-quarter statement but said its so-called Connected for Growth strategy had delivered benefits for the group by making it “simpler, faster and better connected with our consumers”.

For the year, the company continues to expect underlying sales growth of 3% to 5%, an improvement in underlying operating margin and strong cash flow. “We remain on track for our 2020 goals,” said chief executive Paul Polman. 

Quick facts: Unilever PLC

Price: 4740 GBX

Market: LSE
Market Cap: £124.25 billion

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