RBC argues that Unilever (LON:ULVR) has set itself up for a fall by setting sales and margin targets following the failed takeover approach by Kraft Heinz, Proactive Investors reports. The comments come as the Anglo-Dutch consumer goods giant prepares to update investors on its second-quarter performance on Thursday.
Unilever’s share price has climbed into positive territory in today’s session, having added 0.45 percent to 4,210.50p as of 13:58 BST. The advance is largely in line with the broader UK market, with the benchmark FTSE 100 index currently standing 0.37 percent higher at 7,679.36 points.
RBC weighs in on consumer goods giant
Proactive Investors quoted analysts at RBC as commenting ahead of Unilever’s interims next week that they thought that the Anglo-Dutch consumer goods giant’s decision to set sales and margin targets following 2017’s approach from Kraft Heinz risked “delivering the opposite of under-promising and over-delivering”.
“The combination of 3-5% organic revenue growth and 20% (pre-restructuring) EBIT margin by 2020 feels ambitious to us and a long way from being a fait accompli,” the broker elaborated.
Group faces criticism over Dutch move
The results will come amid investor concerns over Unilever’s decision to pick Rotterdam over London for single corporate base as part of its efforts to simplify its structure in the wake of Kraft-Heinz’s failed bid. City A.M. reported yesterday that Iain Richards, head of governance and responsible investment at Columbia Threadneedle Investments, had said that the company’s approach discriminated against UK shareholders.
“The implications are significant and Unilever hasn’t resolved the problem they've created. We need to ensure that we consider the impact and implications for our UK funds and clients,” he said, as quoted by the newswire.
Earlier this week, the Financial Times reported that Nick Train, joint founder of Lindsell Train, a top-five shareholder with a 2.5-percent stake in Unilever, had urged holders of the group’s UK-listed shares to “give serious consideration over the summer as to whether the proposal is in their interest”.