RNS No 1753f
UNILEVER PLC & NV
1st August 1997
UNILEVER RECORDS #4.39 BILLION PRE-TAX PROFIT FOR HALF YEAR
-Includes #3.02 billion profit from Speciality Chemicals Sale -
- Proposed Four-for-One Sub-Division of Shares Announced -
SECOND QUARTER HALF YEAR
# #
8,830 million +1% Turnover 16,818 million +3%
887 million +32% Operating Profit 1,472 million +20%
884 million +16% before exceptional items 1,545 million +16%
3,858 million +534% Pre-Tax Profit 4,396 million +296%
excl profit on Speciality
836 million +37% Chemicals sale 1,374 million +24%
profit on Speciality
3,022 million Chemicals sale 3,022 million
Net Profit
2,948 million +720% at constant rates 3,269 million +385%
excl profit on Speciality
522 million +45% Chemicals sale 843 million +25%
2,513 million +592% at current rates 2,809 million +310%
excl profit on Speciality
473 million +30% Chemicals sale 769 million +12%
134.43p +592% Earnings per share 150.19p +310%
RESULTS: The principal strategic event of the half year was the
sale of the international speciality chemicals businesses to Imperial Chemical
Industries PLC for $8 billion, which was completed on July 8, 1997. The
provisional profit on the disposal of #3,022 million before tax translated at
constant 1996 exchange rates, and of #2,582 million at exchange rates on July
8 1997, is included in reported profits.
BUSINESS PERFORMANCE: Economic conditions have developed much as
anticipated. Weaknesses in some key countries in Western Europe contrast with
strong growth in many developing and emerging markets. In North America,
conditions remained generally favourable.
Overall, margin development was once again positive, most notably
in Europe. The profitability of our business increasingly reflects the
benefits from cost reduction programmes and portfolio improvements.
OUTLOOK: Chairman Niall FitzGerald comments: "Overall economic
conditions are not expected to change materially in the second half of the
year. Sales growth is likely to remain modest, in part due to continuing
portfolio rationalisation. Although profits growth in the remainder of the
year will be less buoyant, profit improvement for the full year should be
satisfactory.
"The strength of sterling and the weakness of the guilder as compared to last
year means there is a substantial divergence between reported net profit at
constant exchange rates and at current exchange rates. The overall impact on
our results for the year in our reporting currencies, when expressed at
current exchange rates, is likely to be significant."
NET DEBT & GEARING: The sale of the international speciality chemicals
businesses to ICI transforms Unilever's net debt position at the half year to
a net cash position of approximately #2,800 million on July 8. Net gearing,
after adjusting for this transaction, is therefore zero, compared to a net
gearing of 24% at the end of December 1996, and 35% at the end of June 1996.
PROPOSED SUB-DIVISION OF SHARES: The directors propose the sub-
division of the companies' ordinary capital as follows:
Each existing ordinary share in Unilever PLC of 5p be divided
into four shares of 1.25p each.
Each existing ordinary share in Unilever N.V. of Fl. 4 be divided
into four shares of Fl. 1 each.
See accompanying announcement for further details.
Enc: copy of full announcement August 1 1997
UNILEVER RESULTS
Second Quarter and Half Year 1997
Embargoed: Not for publication or broadcast before 0800 hrs, Friday 1st
August 1997
The directors of Unilever announce the Group's unaudited consolidated results
for the second quarter and half year 1997:
HALF YEAR
Sale of speciality chemicals
The principal strategic event of the half year was the sale of the
international speciality chemicals businesses to Imperial Chemical Industries
PLC for $8 billion, which was completed on the 8th of July 1997. The
provisional profit on the disposal of #3,022 million before tax translated at
constant 1996 exchange rates, and of #2,582 million at exchange rates on the
8th of July 1997, is included in reported profits. Further details of the
disposal are given on pages 3 to 5 of this announcement.
Financial Results
At constant rates of exchange, sales increased by 3% to #16,818 million over
the corresponding period of last year. Operating profit rose by 20% to #1,472
million. Before exceptional items, operating profit improved by 16%. Excluding
the profit on the disposal of the international speciality chemicals
businesses, net profit rose by 25% to #843 million.
At exchange rates current for each period and excluding the profit on the
disposal of the international speciality chemicals businesses, net profit
increased by 12% in sterling, 36% in guilders and 20% in dollars. Earnings
rose to 41.00 pence per share.
To explain the trends in the business performance, the following commentary on
the regions deals with the continuing businesses, and is based on operating
profit before exceptional items and at constant rates of exchange.
Business Performance
Economic conditions have developed much as anticipated. Weaknesses in some key
countries in Western Europe contrast with strong growth in many developing and
emerging markets. In North America, conditions remained generally favourable.
Overall, margin development was once again positive, most notably in Europe.
The profitability of our business increasingly reflects the benefits from cost
reduction programmes and portfolio improvements.
In Europe, good sales growth in Central and Eastern Europe was partly offset
by the impact of disposals and the continuing pruning of non-priority
categories. Ice Cream sales were lower following poor weather in June. Our
margarine and olive oil businesses recorded strong profit growth, benefitting
from lower costs. There was good progress in a number of home and personal
care categories. Overall, operating profit, which included some benefit from a
favourable phasing of central costs, was well ahead of last year.
In North America sales were ahead of last year, as a net effect of
acquisitions and disposals. There were good performances in fabrics cleaning
and personal wash, and Helene Curtis made a significant contribution to our
overall performance. In prestige products, results were behind the
corresponding period last year. Profits in foods fell against the background
of a decline in sales. A major reorganisation of our US foods operations is
in progress.
In Africa and Middle East sales reflect disposals of non-core businesses.
South Africa and Arabia achieved good results, but the reorganisation of
distribution arrangements at the beginning of the year in Turkey temporarily
depressed sales and profits.
Asia and Pacific continued its strong sales and profit growth, and market
investments were increased. Results were particularly noteworthy in mass
skin, hair and oral care. India and the countries in South East Asia made
excellent progress. Successful product launches combined with cost reductions
led to good profit growth in Australasia.
In Latin America sales growth reflected good performances in ice cream and
personal care. Lower profits reflect substantial increases in investments
behind product innovation in Southern Latin America.
SECOND QUARTER
At constant rates of exchange, sales rose by 1% to #8,830 million over the
corresponding quarter last year. Operating profit increased by 32%, partly due
to substantially lower exceptional items in the quarter. Operating profit
before exceptional items increased by 16%. Excluding the profit on the
disposal of the international speciality chemicals businesses, net profit rose
by 45% to #522 million, helped by lower interest and tax costs.
At exchange rates current for each period and excluding the profit on the
disposal of the international speciality chemicals businesses, net profit
increased by 30% in sterling, 57% in guilders and 39% in dollars over the
corresponding quarter last year.
OUTLOOK
Overall economic conditions are not expected to change materially in the
second half of the year. Sales growth is likely to remain modest, in part due
to continuing portfolio rationalisation. Although profits growth in the
remainder of the year will be less buoyant, profit improvement for the full
year should be satisfactory.
The strength of sterling and the weakness of the guilder as compared to last
year means there is a substantial divergence between reported net profit at
constant exchange rates and at current exchange rates. The overall impact on
our results for the year in our reporting currencies, when expressed at
current exchange rates, is likely to be significant.
PROPOSED SUB-DIVISION OF SHARES
The directors propose the sub-division of the companies' ordinary capital as
follows:
Each existing ordinary share in Unilever PLC of 5p be divided into four shares
of 1.25p each.
Each existing ordinary share in Unilever N.V. of Fl. 4 be divided into four
shares of Fl. 1 each.
The sub-division will be put to extraordinary general meetings of the
companies on September 22, 1997 and, subject to stock exchange approval, is
proposed to be effective from the commencement of trading on the relevant
stock exchanges on October 13, 1997.
SALE OF CHEMICALS BUSINESSES
At exchange rates applicable on the 8th of July the profit as reported is
based on an ungeared consideration of #4,710 million. The net consideration,
following adjustments for debt, cash, working capital (compared to a
predetermined target) and retained liabilities is #3,977 million. Net
assets disposed of are #765 million and goodwill relating to businesses
previously acquired and now written back amounts to #5l7 million. The profit
before taxation is #2,582 million and profit after taxation is #2,064 million.
All of these figures are provisional and are subject to change as final
adjustments are made under the terms of the Sale and Purchase Agreement.
BALANCE SHEET AND CASH FLOW
The balance sheet at 28th June l997 excludes the net assets of the speciality
chemicals businesses sold. The balance sheet includes an amount owing from
Imperial Chemical Industries PLC of #4,167 million (at 28th June exchange
rates) resulting from this transaction. On the 8th July the related legal
formalities were completed and Imperial Chemical Industries PLC paid #4,374
million in cash. The balance will be settled as final adjustments are
agreed.
The chemicals disposal transforms Unilever s net debt position at the half
year to a net cash position of approximately #2,800 million on July 8th.
Net gearing, after adjusting for this transaction, is therefore zero, compared
to a net gearing of 24% at the end December l996, and 35% at the end of June
l996.
Total capital and reserves increase by #2,983 million at end June l997, mainly
due to the profit on the sale of the speciality chemicals businesses. .
Cash flow from operating activities of #1,088 million (l996: #1,239 million)
is somewhat below l996, mainly due to the impact of currency movements given
the appreciation of sterling. Net cash inflow from discontinued operations in
the half year was #180 million (#385 million for the full year l996 out of a
total of #3,816 million.).
CONSOLIDATED PROFIT AND LOSS ACCOUNT (unaudited)
Second Quarter # millions Half Year
Incr. / Incr./
1997 1996 (Decr.) 1997 1996 (Decr.)
8,830 8,710 1 % TURNOVER 16,818 16,314 3 %
8,116 8,034 Continuing operations 15,414 14,978
714 676 Discontinued operations 1,404 1,336
887 674 32 % OPERATING PROFIT 1,472 1,231 20 %
803 578 Continuing operations 1,291 1,042
84 96 Discontinued operations 181 189
884 765 16 % Operating profit BEI 1,545 1,337 16 %
3,022 0 Profit on sale of chemicals 3,022 0
businesses
6 5 Income from fixed investments 10 13
(57) (70) Interest (net) (108) (132)
3,858 609 534 % PROFIT BEFORE TAXATION 4,396 1,112 296 %
(291) (231) Taxation (495) (407)
Taxation of profit on sale
(573) 0 of chemicals businesses (573) 0
2,994 378 692 % PROFIT AFTER TAXATION 3,328 705 372 %
(46) (18) Minority Interests (59) (30)
NET PROFIT AT CONSTANT
2,948 360 720 % 1996 EXCHANGE RATES 3,269 675 385 %
NET PROFIT AT EXCHANGE
RATES CURRENT IN EACH
2,513 363 592 % PERIOD 2,809 684 310 %
COMBINED EARNINGS PER SHARE-
134.43p 19.39p 592 % per 5p of ordinary capital 150.19p 36.50p 310 %
ADDITIONAL INFORMATION (unaudited)
CONSOLIDATED RESULTS EXCLUDING PROFIT ON SALE OF CHEMICALS BUSINESSES
The undernoted analysis provides supplementary information, for comparative
purposes only, on the consolidated results, excluding the profit on sale of
the international speciality chemicals businesses.
Second Quarter # millions Half Year
Incr./ at constant 1996 Incr./
1997 1996 (Decr.) exchange rates 1997 1996 (Decr.)
836 609 37 % Profit before tax 1,374 1,112 24 %
522 360 45 % Net Profit 843 675 25 %
at exchange rates
current in each period
473 363 30 % Net Profit 769 684 12 %
EXCHANGE RATES
For reporting at constant 1996 exchange rates, the profit on the sale of the
international speciality chemicals businesses and related taxation has been
translated at the annual average exchange rates for 1996.
In arriving at the net profit at exchange rates current in each period, the
profit on the sale of the international speciality chemicals businesses and
associated taxation have been translated at the exchange rates prevailing on
the 8th of July 1997.
# millions
CONDENSED BALANCE SHEET (unaudited)
As at 28 As at 31
June December
1997 1996
Fixed assets 6,526 8,067
Stocks 3,386 3,906
Debtors 5,303 4,577
Amount due in respect of
sale of chemicals businesses 4,167
Trade & other creditors (6,418) (6,291)
12,964 10,259
Net debt 1,592 1,693
Provisions for liabilities and charges 2,837 3,042
Minority interests 371 343
Capital and reserves 8,164 5,181
12,964 10,259
CASH FLOW STATEMENT (unaudited)
Half Year
1997 1996
Cash flow from operating activities 1,088 1,239
Returns on investments and servicing
of finance (141) (149)
Taxation (290) (307)
Capital expenditure and financial investment (407) (492)
Acquisitions and disposals 25 (884)
Dividends paid on ordinary share capital (394) (474)
CASH INFLOW / (OUTFLOW) BEFORE MANAGEMENT
OF LIQUID RESOURCES AND FINANCING (119) (1,067)
Management of liquid resources (746) (395)
Financing 630 1,550
INCREASE / (DECREASE) IN CASH IN THE PERIOD (235) 88
GEOGRAPHICAL ANALYSIS
# million
Second Quarter Half Year
1997 1996 1997 1996
Turnover
4,044 4,073 Europe 7,583 7,559
1,482 1,515 North America 2,850 2,736
519 500 Africa and Middle East 970 976
1,214 1,137 Asia and Pacific 2,344 2,137
857 809 Latin America 1,667 1,570
8,116 8,034 Sub-total 15,414 14,978
714 676 Discontinued Operations 1 1,404 1,336
8,830 8,710 TURNOVER 16,818 16,314
Operating Profit BEI
484 385 Europe 801 595
100 86 North America 156 156
41 36 Africa and Middle East 57 65
105 82 Asia and Pacific 198 161
70 81 Latin America 152 172
800 670 Sub-total 1,364 1,149
84 95 Discontinued Operations 1 181 188
3 (91) Exceptional items (73) (106)
887 674 OPERATING PROFIT 1,472 1,231
% % Operating Margin BEI % %
12.0 9.5 Europe 10.6 7.9
6.8 5.7 North America 5.5 5.7
7.9 7.1 Africa and Middle East 5.9 6.7
8.6 7.2 Asia and Pacific 8.5 7.6
8.2 10.0 Latin America 9.1 10.9
9.9 8.3 Sub-total 8.8 7.7
11.8 14.0 Discontinued Operations 1 12.9 14.1
10.0 8.8 OPERATING MARGIN BEI 9.2 8.2
10.0 7.7 OPERATING MARGIN 8.8 7.5
1 A further breakdown of Discontinued Operations is given on page 8.
GEOGRAPHICAL ANALYSIS
# million
Discontinued Operations
Second Quarter Half Year
1997 1996 1997 1996
Turnover
289 276 Europe 563 548
292 275 North America 566 548
9 8 Africa and Middle East 19 19
101 96 Asia and Pacific 211 182
23 21 Latin America 45 39
714 676 TURNOVER 1,404 1,336
Operating Profit BEI
48 44 Europe 91 90
32 37 North America 69 70
1 1 Africa and Middle East 2 4
3 9 Asia and Pacific 16 19
- 4 Latin America 3 5
84 95 Sub-total 181 188
0 1 Exceptional items 0 1
84 96 OPERATING PROFIT 181 189
% % Operating Margin BEI % %
16.1 16.1 Europe 16.2 16.4
11.1 13.3 North America 12.1 12.8
9.1 17.6 Africa and Middle East 12.0 20.0
2.8 9.0 Asia and Pacific 7.7 10.4
- 17.9 Latin America 6.9 14.4
11.8 14.0 Operating margin BEI 12.9 14.1
11.8 14.1 OPERATING MARGIN 12.9 14.2
NOTES
Acquisitions and Discontinued Operations
In the first half of 1997 the effect on turnover and operating profit of
acquisitions made in the period was #55 million and #4 million respectively.
The speciality chemicals businesses were discontinued in the first half of
1997. There were no discontinued operations in the first half of 1996.
Balance Sheet
The condensed balance sheet as at 31 December 1996 has been extracted from the
full Group Accounts, on which the auditors gave an unqualified opinion, and
which have been delivered to the Registrar of Companies.
Cash Flow Statement
The cash flow statement is presented in accordance with the revised United
Kingdom Accounting Standards FRS 1, issued in October 1996. Figures for the
prior year have been restated to the same basis.
Exchange Rates
The results for 1997 and the comparative figures for 1996 have been translated
at constant average rates of exchange, being the annual average rates for
1996. For our reporting currencies these were #1 = Fl. 2.62 = US $1.56. In
addition the net profit, earnings per share and cash flow statement have been
translated at rates current in each period. In arriving at these current rate
figures, operating profit of continuing operations and discontinued
operations, income from fixed investments, net interest and taxation, were
translated at the average rates current in each period. For our reporting
currencies these were :
Second Quarter Half Year
1997 #1 = Fl. 3.13 = US $1.63 #1 = Fl. 3.09 = US $1.63
1996 #1 = Fl. 2.59 = US $1.53 #1 = Fl. 2.56 = US $1.53
For current rate reporting, the profit on the sale of the international
speciality chemicals businesses and associated taxation have been translated
at the exchange rates prevailing on the 8th of July.
The balance sheet figures have been translated at period-end rates of
exchange. For our reporting currencies these were #1 = Fl. 3.25 = US $1.66 at
the half year 1997 (31 December 1996: #1 = Fl. 2.96 = US $1.70).
Dates
The results for the third quarter and announcement of interim dividends for
1997 will be published on Friday 7 November 1997.
1 August 1997
Enquiries: Unilever Press Office: 0171 822 6805
E:Mail: Press-Office.London@Unilever.com
Internet: http://www.unilever.com
SUPPLEMENTARY INFORMATION
1996 QUARTERLY RESULTS
CONTINUING OPERATIONS
The turnover and operating profits for continuing operations during 1996 are
shown below. Figures are reported at the annual average exchange rates for
1996 which were #1 = Fl. 2.62 = US $1.56. The phasing over the quarters was as
follows:
# million 1st 2nd 3rd 4th Total
Qtr. Qtr. Qtr. Qtr. 1996
Turnover
Europe 3,486 4,073 3,947 3,742 15,248
North America 1,221 1,515 1,589 1,579 5,904
Africa & Middle East 476 500 530 558 2,064
Asia & Pacific 1,000 1,137 1,118 1,170 4,425
Latin America 761 809 785 867 3,222
6,944 8,034 7,969 7,916 30,863
Operating Profit (before exceptional items)
Europe 210 385 459 304 1,358
North America 70 86 136 194 486
Africa & Middle East 29 36 51 58 174
Asia & Pacific 79 82 95 120 376
Latin America 91 81 74 88 334
Sub-total 479 670 815 764 2,728
Exceptional Items (15) (92) (30) (95) (232)
Operating Profit 464 578 785 669 2,496
UNILEVER PROPOSES FOUR-FOR-ONE SHARE SPLIT
In the light of the continued strong performance of its share
price, Unilever today announced a proposal for a share split,
subject to shareholder approval.
It is proposed that:
Each existing ordinary share in Unilever PLC of 5p be divided
into four shares of 1.25p each
and
Each existing ordinary share in Unilever N.V. of Fl. 4 be
divided into four shares of Fl. 1 each.
Similar sub-divisions will be made with regard to the American
Depository Receipts of Unilever PLC and the New York shares of
Unilever N.V.
It is further proposed to abolish the K certificates in
respect of Unilever N.V. ordinary shares, in line with current
market practice.
The four-for-one split will be put to extraordinary general
meetings of the companies on September 22, 1997 and is
proposed to be effective, subject to stock exchange approval,
from the commencement of trading on the relevant stock
exchanges on October 13, 1997. Shareholders will be further
advised on how the share split affects them.
Background Note:
The shares of Unilever PLC are listed on the Stock Exchange,
London, and as American Depository Receipts, in New York.
The shares or certificates (depository receipts) of Unilever
N.V. are listed in Amsterdam, London, New York and in Austria,
Belgium, France, Germany, Luxembourg and Switzerland.
The existing 5p PLC ordinary share and Fl. 4 N.V. ordinary
share came about from a five-for-one sub-division effective
from June 29 1987.
August 1 1997
END
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