Unilever: Sales Growth Rebounded In Q1; 3.4% Dividend Yield (Preview)

Company Update (ULVR LN) (Buy)

Summary

• Unilever's underlying sales growth rebounded to 5.7% in Q1 2021, though with a number of different moving parts due to COVID-19.

• There was real growth in every region except Europe, and growth was genuine even taking currency headwinds into account.

• Unilever's competitiveness has continued to improve, recent acquisitions are starting to help accelerate growth, and disposals are on track.

• A new €3bn buyback program was announced, and more is likely when planned disposals are completed; the dividend is maintained.

• With shares at 4,294p, we expect annualized returns to be between high-single-digits and low-teens, including a 3.4% Dividend Yield. Buy.

Introduction

We review our Unilever investment case after a Q1 2021 update was released on April 29. We initiated a Buy rating on Unilever in December 2020. Unilever stock is now 2.9% lower (in U.K. pounds), and offers a 3.4% Dividend Yield.

The Q1 update contained different moving parts, but overall it supports our investment case, which in…