Unilever Looking Forward to Simplify Their Capital Structure

UNILEVERThe fast-moving consumer giant Unilever (NYSE: UN) reported higher than expected performance during the half-yearly results of the fiscal year 2017. The underlying sales grew by 3% on year on year basis during the fiscal 2017 half year while it registered 5.5% increase in turnover as compared to the same period last year.

Because of the impressive performance by Unilever, the stock prices grew and registered a high yearly figure of $60.90 last week. We think that the stock price bullishness of Unilever to continue for a while in future and the reason for same is discussed below.

This London based company reported revenues worth 27.725     billion Euros in 2017which is up by 5 percent from 26.283 billion Euros from 2016. At the end of June this year, the company’s net profit has risen to 3.32 billion Euros from 2.71 billion Euros in the previous year.

The company was able to report a rise in sales all thanks to higher price retaliation in the emerging markets. However, the overall volumes remained flat in the emerging markets. The refreshment business that comprises of tea business and ice-cream was the leading contributor to the sales growth of the company. The gross margin during the first half of fiscal 2017 gained 40 basis points to reach a mark of 43.1 percent.

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Because of the strong performance of Unilever in the recent quarters, the company is aiming for sales to grow 3 to 5 percent by the end of this year. Unilever speculates the growth to be driven by innovative plans and increase in market investment and branding. In addition to this, through the Connected 4 Growth program that was announced 2016, the company was able to save a whopping 1 billion Euros. Unilever anticipates achieving savings worth 6 billion Euros and underlying profit margin of 20 percent by the end of 2020.

The dividend of the company grew by 11% to 2.93 percent. In the past 13 years, there has never been an occasion when Unilever has missed a dividend payout. It has repurchased stocks to a tune of 1.40 billion Euros under the repurchase program and is looking confident in completing 5 billion Euros program by the end of this year.

The company shareholders insisted Unilever review its business structure after $143 billion buyout bid was rejected. The bid was made by a company called Kraft Heinz Co. in February this year. To consolidate its position, a business review was undertaken by the makers of Dove Soap and Lipton Tea amid weak growth and rising competition in the FMCG industry.

Based on the review, the company has decided to simplify the capital structure. In this regard, Unilever is making plans to repurchase shares worth $520 million from Dutch institutional investors. This stock purchase would undoubtedly help the corporate governance of Unilever because of its listing on both London as well as Amsterdam exchange.

Report of the news mentioned that the company the company has accepted to buy the 7% and 6% preference shares (which are held by NN Investment Partners and an insurer namely ASR Netherlands) in Unilever N.V. back.

According to the news report, the company has agreed to buy back the 7% and 6% preference shares in Unilever NV, held by ASR Netherlands – an insurer and NN Investment Partners. Unilever is expected to launch a public offering for the outstanding preference shares.

The offering is likely to take place in the third quarter of 2017 and would be completed before the end of this year. The company wants to delist itself from the Euronext Amsterdam Exchange after it can repurchase the shares. Hence, increasing revised sales growth, simplified capital structure and the quality cost-cutting program is likely to keep the Unilever stocks bullish in the coming time.

The price chart is indicating firm support for the stock at 50.60. The shares are moving high without violating trend line support. In addition to this, “RSI Stochastic” is in oversold region. Hence, we can easily anticipate the uptrend to continue in future.

Unilever Stock Price Sep 18th 2017

Unilever Stock Price Sep 18th, 2017

To make the most of the current rally, traders are advised to buy high or above option from any of the honest Binary brokers that are listed over here. The Option should have an expiry period of September 26, 2017. Also, the stock should be trading at NYSE near $60.

Summary
Unilever Looking Forward to Simplify Their Capital Structure
Article Name
Unilever Looking Forward to Simplify Their Capital Structure
Description
Plans to simplify the capital structure upwardly revised FY17 sales growth outlook, and effective cost savings program turns Unilever bullish.
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BinaryManual.com
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Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.


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