Unilever refused to comment on City speculation that its food businesses may be up for sale as it announced better-than-expected half-year results yesterday.
Analysts at investment bank Liberum Capital said this week that they expected Unilever to sell its food arm, excluding its ice creams and beverages, for an estimated €14bn (£12.17m)
Unilever owns food brands such as Knorr soup, Flora spreads, Marmite and Magnum ice cream. It has four business units: Home Care; Personal Care; Savoury, Dressings & Spreads; and Ice Cream and Beverages.
Pablo Zuanic and Lisa Hau from Liberum wrote in a note: “We expect Unilever at some point to implement a large accretive acquisition in the HPC (household and personal care) space and to partly fund it by selling it’s the food unit (excluding ice cream and beverages) which we estimate can be sold at about one times sales (or €14bn).”
Sale “highly possible”
Rollits' food group director Julian Wild said: “P&G recently exited food with the sale of Pringles and I would say a sale of Unilever’s food business was highly possible. Although it has a very big food interest you would not regard it as a food company.
"You see with Kraft and its announcement of a split in its business and with P&G that these companies want to focus.”
Wild added that he thought Unilever would be looking to sell all its food brands in one deal, or else the process would take too long and get messy. “With such a scale of business it needs to find a buyer for the whole thing.”
However a Unilever spokesman said: “We never comment on rumour or speculation.”
Unilever saw net profit rose to 2.41bn euros (£2.09bn) for the first half of 2011 to June 30, up 9% on last year.
Cost recovery time lag
However, it said profit margins were hit by the time-lag between costs rising and price increases coming into effect.
"In a tough and volatile environment we have again delivered strong growth," said Unilever chief executive Paul Polman.
Analyst Graham Jones from Panmure said Unilever’s first half results looked impressive, showing a sharp acceleration in sales growth from 4.3% in Q1 to 7.1% in Q2.
Darren Shirley from Shore Capital also said results were ahead of expectations. He commented: “We note that… management states “More so than ever, in today’s volatile environment, our number one priority is to ensure that our brands are managed for the long term health of the business.”
It sold its Italian frozen foods business, Findus, for €805m (£699) to a company part-owned by Birds Eye Iglo in July 2010.