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Unilever: Just Keep Doing What You're Doing After Strong Q1 2016 Results

Summary

UL's Q1 2016 results show the consumer goods giant remains a strong performing business.

Underlying growth continues to paint a compelling picture for the business which underpins the robust 6% dividend growth also announced.

Based on strong performance and dividend hike, fair value now appears to sit around the $47 mark.

Recently, there have been few companies who have managed to leave me consistently delighted on reading their updates. One of those that does, however, is consumer giant Unilever (NYSE:UL) (NYSE:UN).* Like many others amongst you, Unilever has been one of my top holdings for longer than I care to remember. Quarter after quarter I have therefore pored over their results to see how things are rolling along. Generally they have impressed me above and beyond what I had anticipated.

This morning they released their Q1 2016 results. So, have they managed the same trick again this quarter? I'll take a look. What becomes apparent is, again, Unilever has proven its incredible appeal to investors across the globe.

Not an Obviously Great Start…

Unilever does not get off to a great start, however. Revenue growth dropped 2% between Q1 2015 and 2016. Geographical diversification hardly seemed to help here with revenue across all regions showing a reported dip:

Yet in a narrative so familiar it almost feels hackneyed, foreign exchange headwinds were the chief culprit in this revenue reduction:

Unilever's underlying sales growth actually great a very healthy 4.7%. Chip in the additional 0.7% added by acquisitions and performance without considering currency was excellent. Unfortunately, currency headwinds shoved down reported results by over 7%.

Underlying Growth Accelerating

What is most impressive is the acceleration of this underlying revenue growth recently. Compared to both 2015's Q! and FY results, Unilever has managed to produce solid improvements:

Even Europe which continued to stand out as the historical serial underperformer was better than you might imagine. The slightly deeper underlying revenue decline was fed by the continued price deflation the region is experiencing which dragged prices lower. Volumes, in fact, managed to grow at a healthy clip:

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