Dr Niall Fitzgerald, chairman of the Unilever ice cream-to-perfume combine, remains confident about the timetable for the introduction single European currency on January 1st, 1999, despite concerns about product and labour markets.
Unwrapping further growth in Unilever's annual profits Dr Fitzgerald emphasised that 1998 would be a critical year in the countdown to European Monetary Union. "We expect it to proceed on time but much remains to be done to ensure that product and labour markets are both flexible and competitive," he said.
Dr Fitzgerald's positive comment on EMU prospects came amidst growing uncertainty about the ability of European Union countries to put the single currency in place on time. Increased uncertainty was caused earlier this week when 150 German economics professors called for an "orderly postponement" of next year's EMU launch.
At Unilever, 1997 net profits before exceptional charges and currency adjustments improved 13 per cent to £1.98 billion on sales up three per cent at £31.76 billion. Underlying volumes increased 3.5 per cent and operating margins improved by almost 1 per cent of sales.
Inevitably, though, sterling's revaluation took the shine off the group's results, wiping around £300 million off reported profits after currency adjustments. At the same time, Dr Fitzgerald's active portfolio management involved disposals exceeding £5 billion and purchases of around £1 billion.
Despite sharply increased advertising in support of consumer products, end-year net cash still increased by as much as £1.5 billion to £3.2 billion providing huge financial backing for Unilever's growth plans.
Outlining the group's objective of creating value through profitable growth, Dr Fitzgerald said Unilever was now seeking to deliver a "total return to shareholders" putting the group in the top third of a group of peer companies. The novel concept of "total shareholder returns" seeks to compare the performance of different stocks and shares over time by combining share price appreciation and dividends to show the total return to shareholders.
Total dividend payments on the group's 1997 performance are up 5 per cent at 8.42p per share.
