Results round-up

Unilever reported that revenue grew but missed expectations as the Anglo-Dutch consumer goods giant was affected by economic woes in Brazil and demonetisation in India, two of its largest markets, and expects the difficult market conditions to continue in 2017.

Unilever, which makes Hellman’s mayonnaise and Marmite, reported that turnover for calendar 2016 fell 1% to €52.7bn, compared to the previous year, which was slightly lower than analysts' forecasts of €52.83bn.

Sales in the fourth quarter rose 2.2%, which was lower than analysts' expectation of 2.8%.

Chief executive Paul Polman said he expects a “slow start” to 2017 as the “challenging” market conditions will likely continue.

He said: “Priorities for 2017 continue to be volume growth ahead of our markets, a further increase in core operating margin and strong cash flow. The tough market conditions which made the end of the year particularly challenging are likely to continue in the first half of 2017. Against this background, we expect a slow start with growth improving as the year progresses."

The company said that in India, growth was below historic levels, particularly in the last quarter when demand was adversely impacted by the removal of the Rs.500 and Rs.1,000 notes. In November, the Indian government announced the demonetisation measures in a bid to root out ‘black’ money - cash earned illegally or legally and not declared to tax officials.

Brazil has been experiencing an economic recession since, 2014, its worse on more than three decades, which affected sales. Unilever also said that it has a number of open legal proceedings related to indirect taxes in the country and intends to appeal a ruling.

Half-year sales surged at Diageo, the owner of Guinness, Smirnoff and Pimm’s, as it benefitted from favourable foreign exchange rates and was also bolstered by an improved performance in the US spirits market.

The FTSE 100 company’s expectations for the full year are unchanged and its remains confident of achieving its medium term objective of consistent mid-single digit top line growth and 100 basis points of organic operating margin improvement in the three years ending 30 June 2019.

Revenue for the six months ended 31 December 2016 climbed 14.5% to £6.42m, compared to the previous year, and operating profit surged 28% to £2.06m, reflecting accelerated organic growth and favourable foreign exchange rates.

Organic growth improved across all regions with a 4.4% increase in net sales, which compared to the analyst consensus according to Bloomberg of 3.1%.

This was matched by organic operating profit up 4.4% due to a an improvement in the gross margin improvement, progress on productivity, which offset implementation costs, and the profit from the sale of its stake in Indian drinks firm, United Breweries, to Heineken International before the period.

Sky's profits fell in the first half of the year as it absorbed a step-up in costs for Premier League broadcasting rights, invested in Germany and Italy, and launched its mobile service in the UK.

In the media group's first public announcement since 21st Century Fox’s 1,075p per share cash offer in December, Sky reported revenue in the six months to 31 December of £6.4bn, which was up 12% on the same period a year before or 6% at constant currencies.

After a £314m jump in football rights costs, operating profits fell 12% to £461m and profit before tax fell 9% to £377m, while earnings per share were down 5% to 28.3p.

As part of the terms of the proposed takeover by 21st Century Fox, Sky previously said it will not pay any dividends in 2017.

Integrating Sky Italia and Sky Deutschland in the enlarged group added cost £218m of costs, while dealing with the proposed takeover had already cost Sky £9m.

With more than 500,000 new customers added, of which 205,000 were in the UK, chief executive Jeremy Darroch hailed the progress made on strategy and said the company was on track for the full year.

These results could be crucial evidence in helping Darroch and Fox chief Rupert Murdoch convince independent shareholders, of which Fox needs acceptance from 75%, of the quality of Sky's fundamentals.

One sore point was that UK customer churn was higher than expected, up to 11.6% year-on-year on a 12-month rolling basis.

Sky said this reflected the highly promotional market and an increased proportion of broadband customers in the total customer base, with these customers apparently having a greater propensity to switch providers.