Unilever ups dividend as new strategy begins to bear fruit

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".