Preview Q2 (SNSBank)

1. ischav2 1 augustus 2007 19:50

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   • ischav2

     Lid sinds: 11 mrt 2004

     Laatste bezoek: 31 mrt 2025

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   Unilever (22.36), Rating: ADD, 2006A: 1.25 2007E: 1.34 2008E: 1.42
   Event
   Preview second-quarter results
   Comment
   Unilever will report second-quarter results tomorrow before opening. We expect the company to report second-quarter sales of EUR 10.4bn, an increase of 1.3% compared to Q2 2006. Organic sales growth is estimated at 4.2% with 3.2% from volumes and 1.0% from price. We forecast adjusted EBIT of EUR 1.5bn, in line with last year. The operating margin is expected to be unchanged at 14.6%. We expect another substantial negative impact from higher input costs, but this should have been offset largely by cost savings. Unilever has guided for a relatively low tax rate in the second quarter. We have assumed 20%. Net profit for shareholders' equity is expected to amount to EUR 1,048m compared to EUR 986m last year.
   Organic sales growth of 4.9% in the first half of 2007 should increase confidence that Unilever will be able to meet its 3% to 5% growth target for 2007. The operating margin in the first half of this year is still ahead of last year (14.6% versus 14.4%), but this is undoubtedly a more challenging metric. Unilever has guided for a higher reported operating margin as well as for an underlying improvement.
   Conclusion
   We expect further evidence from Unilever that the top line is in pretty good shape. Whether the same applies to the operating margin remains to be seen in the ongoing difficult input cost environment. We have an Accumulate rating on Unilever with a price target of EUR 24.50.