View from City Road: Unilever good for growth

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ON THE day that the number of long-term unemployed exceeds 1 million, it is encouraging to hear Michael Perry, the chairman of Unilever, say that his greatest concern was finding enough managers for planned expansion.

This might suggest that the company is looking forward to explosive growth. While that would be an exaggeration, last year's results are promising. Profits moved off their three-year plateau, gaining 13 per cent to burst through the pounds 2bn mark with pounds 29m to spare. Earnings rose by 12 per cent to 69.1p a share, and the dividend rose by 10 per cent to 20.8p a share after a 12 per cent lift in the final.

More important, the rate of growth improved as the year wore on, with the last quarter benefiting from a pounds 49m improvement in profits in the US, partly offset by sluggish trade in Europe. Profits were stated after a pounds 91m restructuring charge.

During the year the company made pounds 310m of disposals and pounds 210m of acquisitions.

Economic trends may be in Unilever's favour, but political ones are not. Mr Perry is worried about both Gatt and the Maastricht treaty, which he would like to see ratified.

The company achieved a better-than-expected result after spending pounds 2.7bn on advertising, up by pounds 366m, and pounds 461m on reasearch and development, up by pounds 35m. Capital spending also rose by pounds 49m to pounds 1.1bn. This investment will continue in the current year and should bring benefits in the second half.

The shares have outperformed by about 50 per cent during the recession. They rose 19p to pounds 11.65p yesterday and should continue to be firmly held even though other stocks may have better recovery prospects.