Results round-up: Unilever, Sky, Debenhams

Unilever upped its quarterly dividend 12% as underlying sales grew 2.9% in the first three months of the year, despite sales volumes remaining in the red for the third consecutive quarter.

Having adopted a new approach to improve shareholder returns and accelerate efforts to boost profitability in the wake of the rejected £115bn takeover approach from Kraft Heinz, the quarterly dividend was bumped 12% higher to €0.3585 per share.

Turnover grew 6.1% to €13.3bn in the first quarter, including a positive currency impact of 2.4%, as prices rose 3.0% but volumes shrank 0.1%.

Underlying sales growth was 3.4%, excluding the spreads division that is to be sold off as a result of the review, with refreshment, home care and personal care all growing ahead of their markets, while sales in foods were flat due to the later Easter this year.

Unilever outperformed a wider market that grew roughly 2%, with volumes also negative as Europe and North America declined in the first quarter, while growth in India recovered from November's demonetisation but Brazil's economy continues to limp.

Sales in emerging markets were notable, with underlying growth of 6.1% as prices gained 5.3% and volumes climbed 0.8%.

Chief executive Paul Polman said the first quarter growth remained ahead of Unilever's fast-moving consumer goods markets and that the new approach reinforced in last month's strategic review was bearing fruit.

"The change programme 'Connected for Growth' which we started implementing in the autumn last year is starting to bear fruit and is making Unilever more agile and closer to the local markets, unlocking both further growth and margin."

As a result, Polman said the group was on track for another year of underlying sales growth of 3-5% and he expected improvement in underlying operating margin this year of "at least 80 basis points and strong cash flow".

Sky

Sky said it had signed a multi-year $250m (£195m) co-production deal with US television network HBO as operating profits fell 11% to £1.01bn for the nine months to April.

Revenues rose by 5% on a constant currency basis to £9.6bn, despite a £494m increase in the costs of screening live English Premier League football.

Sky said weak consumer markets in the UK and Italy had resulted in tougher advertising markets in calendar 2017.

“In spite of this, our advertising revenue was up 4% to £613m, boosted by the strong performance of our TV8 free-to-air channel in Italy, greater reach of our wholly-owned channels through customer growth in Germany, and Sky Adsmart in the UK,” Sky said.

It added that more than 100,000 new customers had joined in the most recent quarter, with 769,000 added in the last year, taking the total customer base to 22.4m.

Chief executive Jeremy Darroch said Sky was “on track financially” for the full year “despite the broader consumer environment remaining uncertain”.

Debenhams

Debenhams' new chief executive Sergio Bucher unveiled his strategic vision for growing the department store group, centred around making the stores a more enjoyable destination for 'social shopping' and driving efficiency through 'simplifying and focusing' the business.

Interim results, reported alongside this strategic update, were unexceptional but in line with expectations, with UK like-for-like sales rose 0.5% and gross transactions up 2.9% to £1.7bn.

Profit before tax fell 6.4% to £87.8m and earnings per share dropped 6.5% to 5.8p. The interim dividend was held flat at 1.025p per share, as operating cash flow before financing and taxation shrank to £108.7m from £133.5m last year but net debt was trimmed to £216.9m from £224.2m.

Bucher's 'Debenhams Redesigned' plans took centre stage, as the ex Amazon fashion chief stated that a chief aim was to "define clearly what Debenhams stands for and simplify the way we operate to benefit customers today and therefore shareholders in the future", aiming to drive visits online and offline by investing in a mobile-led digital update and simplification of supply chains and decluttering the stores store estate.

The strategy involves "leveraging existing assets, including good stores in strong locations; leading market positions in key product categories; and profitable and growing international business", with a cost of £450m over the three years to 2020, which is £100m more than previously planned, plus exceptional costs of £50m.

Consultation is beginning on the closure of one central distribution centre and around 10 smaller regional warehousing facilities, while up to 10 UK stores out of 176 will be reviewed for closure over the next five years, and the Swiss-Spanish CEO plans to exit some brands and non-core international markets.

The concept of social shopping is based around the feeling that "leisure is increasing share of consumer spending. For Debenhams customers, the leisure experience is an important part of shopping and mobile interaction growing fast," which provides an opportunity for Debenhams to lead in this category.

To drive efficiency, on top of the simplication of the store estate and forging a closer link between stores and digital, Bucher also aims to make "more effective use" of staff, inventory and infrastructure.