Anglo-Dutch consumer products group Unilever NV/Plc reported a 15 percent rise in annual profit before tax on Tuesday and said it was putting its speciality chemicals businesses up for sale.
Pre-tax profit rose to 2.66 billion pounds ($4.4 billion) on a six percent rise in turnover to 33.52 billion.
Unilever shares surged on the results, which were better than analysts had forecast, and the planned speciality chemicals sale.
Chairman Niall FitzGerald said the overall economic situation in 1997 was likely to be generally favourable, as in 1996, but he warned about market conditions in Europe, particularly France and Germany.
He said the planned sale of Unilevers speciality chemicals businesses would enable the company to concentrate on achieving growth in its consumer goods operations, particularly in developing and emerging markets.
We will now seek actively buyers for the totality or the individual businesses and we will then assess those over the next month or two, he told Reuters in an interview. We would hope to conclude a sale in the course of the next three to six months.
FitzGerald declined to say how much the businesses might be worth. The four units National Starch and Chemical Company, Quest International, Unichema International and Crosfield have a combined turnover of 3.0 billion pounds, nine percent of Unilevers total sales, and showed operating profit of 415 million in 1996, with margins of 14.1 percent.
These are extremely large and important parts of our businesses, but for some time we have been reviewing whether they should be a continuing part of the portfolio not because they are poorly performing themselves, they are excellent performers but whether we can give them the concentration and the focus that they require, FitzGerald said.
They are essentially industrial businesses selling not to consumers but to intermediate customers. They are very fine businesses, FitzGerald said.
But if you look at the way this industry is developing we have to take a decision either to significantly improve our presence in these markets, perhaps double it, or to exit and in exiting to concentrate on the other 90 percent of our business which is our mainstream consumer goods business.
The four companies together make up one of the worlds largest speciality chemicals groups, employing some 15,800 people in more than 35 countries.
Unilever is the worlds largest producers of both margarine and ice cream, and its activities span food, personal products such as Ponds cold cream and household goods brands including soap powder Omo and Lux soap.
In Europe, Unilevers overall results in 1996 were held back by the impact of poor weather on ice cream sales and the impact of the BSE beef crisis. We see little reason, however, to believe that conditions in Europe, particularly in France and Germany, will improve, FitzGerald said.
But good progress in North American market conditions provided the basis for better results, and the momentum of growth continued strongly in the fast-growing emerging markets.
Analysts forecasts for pre-tax profit centred on 2.53 billion pounds, and Unilever shares surged 91 pence to 1,484 in London. In Amsterdam the companys shares rose 19.70 guilders, or 6.29 percent, to 333.10.
Unilever Plc is paying a final dividend of 21.76 pence, making 32.05 for the year, a rise of nine percent.
