Unilever (NYSE: UL) shares were climbing $1.68, or 5.17% to $34.15 in early trading this morning. This is after, according to Bloomberg, "the world's second-largest maker of food and detergent, said revenue will beat its forecast for the first time in six years."
Naturally, with rising commodity prices, I expected the company to feel at least a margin squeeze, but Unilever has been proactive and has raised prices 4.8% in the quarter to offset its rising costs. The company increased not only prices but also managed to grow sales of Dove soap, Hellmann's mayonnaise and Lipton tea to post a first-quarter net income climb of 33% and exceed analysts' estimates.
Apparently, the company's Boursin cheese unit, which took the brunt of the price increase, also helped boost gains as revenue grew 7.2% and sales rose 14% in the Asia Africa region and 9.6% in Latin America, making up for disappointing growth in Europe.
TheStreet.com's Jim Cramer says the exchange rate plus massive undervaluations make the great brands prime targets.
There's always been a groupthink in Europe about currencies. The companies that want to buy American companies have, at times, seemed to care more about the currency, or at least not buying a company in a country whose currency is in decline, than they care about the actual target.
That's what it looks like now that a large German company and now a large Italian company have decided to start splurging. It is no coincidence that Deutsche Tel (NYSE: DT) (Cramer's Take) and Finmeccanica are exploring Sprint (NYSE: S) (Cramer's Take) and DRS (NYSE: DRS) (Cramer's Take). These companies are selling for something like 40% off for those bearing euros, and neither potential acquirer has debt problems or subprime issues, so the deals don't have big borrowing problems.
That's what I am thinking about when I see the better-than-expected figures today from Unilever (NYSE: UL) (Cramer's Take) and the other day from Nestle. These companies are part of that same groupthink. They are looking, no doubt, at a Heinz (NYSE: HNZ) (Cramer's Take) and thinking, "Wait, that's about a $10 billion company that's a global leader."
Unilever (NYSE: UL) is the world's second-largest maker of food and detergent, so you would expect the company to hurt with rising commodity prices. But Unilever has been proactive and has raised prices 4.8% in the quarter to offset its rising costs. In fact, the company said revenue will beat its forecast for the first time in six years on increased prices and sales of Dove soap, Hellmann's mayonnaise and Lipton tea. First-quarter net income climbed 33%, exceeding analysts' estimates.
As expected, April retail sales have so far indeed been strong, although there are some ares weakness is seen.
Costco (NASDAQ: COST) shares are up 1.2% in premarket trading after the warehouse club retailer said April same-store sales increased 8%, beating analysts' expectations of 6.1%.
Wal-Mart Stores Inc. (NYSE: WMT) shares are also higher in premarket trading, up 1.8%, after the world's largest retailer, said same-store sales climbed 3.2%, beating the 2.1% forecast by analysts. Staying with Wal-Mart for a moment, it said it plans to invest millions in Canada and open more supercenters.
The more luxurious items, though, such as lingerie sold at Limited Brands (NYSE: LTD) have seen a slowdown as the company said that April same-store sales fell 5%, falling short of the 2.3% sales decline analysts had anticipated.
Profit rose to $2.71 billion, or 82 cents per share, compared with $2.51 billion, or 74 cents per share, a year ago. Revenue rose 9% to $20.46 billion from $18.69 billion last year. The Cincinnati-based company was expected to earn 81 cents on revenue of $21.44 billion, according to Thomson Financial.
"P&G delivered strong results in-line with long-term targets in a challenging economic and competitive environment with broad-based sales and share growth, earnings growth and overhead cost improvement," said Chief Executive AG Lafley in the earnings release.
Shares of the maker of Tide (my favorite detergent) and Pampers (our family's preferred diaper for my son) have slumped more than 10% this year under-performing rivals including Church & Dwight Co. (NYSE: CHD) and Colgate-Palmolive Co. (NYSE: CL). Uniliver Plc. (NYSE: UL) has fared slightly worse than P&G.
ConAgra Foods (NYSE: CAG) is a top food producer, offering packaged and frozen foods, seafood and dairy products to retail, foodservice, commercial product and international customers. Among the company's many brands are Hunt's, Banquet, Chef Boyardee, Van Camp's, Healthy Choice, Orville Redenbacher's, PAM, Slim Jim and Wesson. Major competitors include Kraft Foods (NYSE: KFT) and Unilever (NYSE: UL).
The company pleased investors late last month, when it reported Q3 EPS of 63 cents and revenues of $3.53 billion. Analysts had been expecting 41 cents and $3.20 billion. Management also guided FY08 EPS to $1.80-$1.85 ($1.60 consensus) and announced that it would sell the company's trading and merchandising arm to the Ospraie Special Opportunities fund and others for $2.1 billion.
I love ice cream as much as the next guy. OK, way more than the next guy. I've eaten far more than my fair share of Haagen-Dazs and Ben & Jerry's lux frozen treats. But though I've watched with fascination as Ben & Jerry's exalted hippie icons and the odd politician with its flavors, I've never thought of an ice cream as an icon of political opinion.
No more will I hold such a narrow world view! This weekend, Haagen-Dazs announced a new flavor, Vanilla Honey Bee. The flavor isn't meant for its delicious honey taste, as it is to bring more visibility to the plight of the honey bees (overworked, it seems, from too much travel and forced labor in the almond groves, though cell phone towers have also been suspected). Haagen-Dazs is donating $250,000 to two universities to study Colony Collapse Disorder, and a spokesperson says that 40% of the company's flavors depend (in one way or another) on bees: "We use 100% all natural ingredients like strawberries, raspberries and almonds which we get from California. The bee problem could badly hurt supply from the Pacific Northwest."
On the other side of the ice cream aisle, Ben (Cohen) and Jerry (Greenfield), founders and corporate namesakes of Ben & Jerry's, have gone public with their endorsement of Barack Obama for president. They will tour Vermont in Obamamobiles, giving away scoops of "Cherries for Change" ice cream. While fans on Obama's web site seem excited, there's no news as to what sort of flavor "Cherries for Change" is (or is it just Cherry Garcia with a new label?), whether "Baracky Road" or "Yes we Pecan" will follow, or if corporate overlord Unilever (NYSE: UL) is distributing the flavor to grocery store freezer sections near you.
MOST NOTEWORTHY: Large Cap Oilfield Services, Andersons and Unilever were today's noteworthy downgrades:
UBS downgraded Large Cap Oilfield Services stocks citing a "more sober 2008 outlook." The firm downgraded Smith International (NYSE: SII) and Baker Hughes (NYSE: BHI) to Neutral from Buy, citing delays in offshore growth for the Smith downgrade and execution issues for Baker Hughes.
Banc of America downgraded shares of Andersons (NASDAQ: ANDE) to Neutral from Buy following the company's Q4 results to reflect a lack of visibility on FY08 growth.
Citigroup downgraded shares of Unilever (NYSE: UN/UL) to Hold from Buy to reflect an increase in commodity costs.
OTHER DOWNGRADES:
Lehman lowered PNM Resources (NYSE: PNM) to Equal Weight from Overweight; shares were also downgraded to Hold from Buy at Citigroup.
Friedman Billings downgraded Thomas & Betts (NYSE: TNB) to Market Perform from Outperform.
Bear Stearns has upgraded Schlumberger (NYSE: SLB) from "peer perform" to "outperform," according toBriefing.com. The news service also reports that Time Warner (NYSE: TWX) was upgraded to "buy" from "neutral" at UBS.
AIG (NYSE: AIG) has been downgraded to "equal weight" at Lehman, according to24/7 Wall St. The news site also writes that Unilever (NYSE: UL) was downgraded to "hold" from "buy" at Citigroup.
Wal-Mart Stores Inc. (NYSE: WMT) will open its first in-store medical clinics under its own brand name, The Clinic at Wal-Mart, as a joint venture with local hospital systems in Atlanta, Dallas and Little Rock, Ark., starting in April.
Unilever (NYSE: UL) on Thursday reported a 65% drop in fourth-quarter net income to 721 million euros after selling its European frozen-food business. However, comparable sales growth showed a nice rise. Revenue at Unilever rose 2% to 9.89 billion euros and underlying sales growth was 6.1% during the quarter, with pricing contributing three percentage points to the underlying sales growth. Analysts had expected a profit of 693.5 million euros on sales of 9.95 billion euros.
D.R. Horton (NYSE: DHI) swung to a fiscal first-quarter loss of $128.8 million, or 41 cents a share, with revenue falling to $1.71 billion from $2.8 billion. The quarterly results included $245.5 million in charges. Shares are up nearly 1% in premarket trading.
TechCrunch is reporting this morning an unconfirmed rumor that either Google (NASDAQ: GOOG) or News Corp. (NYSE: NWS)'s MySpace is about to announce a big $1-1.5 billion acquisition in the social space. TechCrunch has come to a conclusion that the most likely candidate is Bebo. Again - unconfirmed rumor and Bebo is the speculation of the guys at TechCrunch.
Lowe's Companies, Inc. (NYSE: LOW) might be in focus today after Home Depot's (NYSE: HD) posted its quarterly results. The second largest home improvement retailer is due to report Monday, Nov. 19 and analysts are projecting a 10% decline in earnings.
Adobe Systems Inc. (NASDAQ: ADBE) CEO Bruce Chizen surprisingly announced yesterday he is stepping down. This morning, Adobe named current President and Chief Operating Officer Shantanu Narayen as Chizen's successor starting Dec. 1, and he reassured investors with financial guidance for the coming fiscal year. ADBE shares are off 1.6% in premarket trading.
Goldman Sachs upgraded consumer goods giant Unilever (NYSE: UL) to Neutral from Sell following its third-quarter earnings. Goldman says the results "demonstrated better-than-expected pricing power, accelerated reorganization and cost control."
E*Trade Financial Corp. (NASDAQ: ETFC) is rebounding some 7% this morning, in premarket action after shares of the electronic broker nosedived over 58% yesterday when it announced writedowns and an analyst suggested it could go into bankruptcy.
Where the rubber doesn't meet the road -- While erectile dysfunction ads have become as common as cell phone ads on television, the networks have been much less receptive to condom ads. Companies such as Church & Dwight Co.'s (NYSE: CHD) Trojan are eager to make buys during shows such as the new CBS show Swingtown, but face stiff opposition from the networks.
Free bikes in Chicago? In Paris, outdoor advertising company JC Decaux (EPA:DEC) maintains a fleet of 10,000 free bicycles on the street that are available for free use by anyone for 30 minutes, and longer by rental. The city repays Decaux by granting it exclusive rights to market at more than 1,000 publicly-owned sites around town. Chi-town mayor Richard M. Daley recently visited Paris to check out the idea for possible adoption back home.
MOST NOTEWORTHY: Merck, the European semiconductor sector, Thornburg Mortgage and Prudential were today's notable upgrades:
Merck & Co Inc (NYSE: MRK) was upgraded to Buy from Neutral by Bank of America, which believes the company's sales momentum will continue.
The European semiconductor sector, which includes Infineon Technologies AG (NYSE: IFX) was upgraded to Positive from Neutral by Lehman Brothers, as they believe a recovery is under way in the industry. The firm upgraded Infineon to Equal Weight from Underweight.
Thornburg Mortgage Inc (NYSE: TMA) was upgraded to Market Perform from Underperform at Piper, as they see limited liquidity risks, given the strong quality of the company's mortgage assets.
Prudential Financial Inc (NYSE: PRU) was upgraded to Outperform from Neutral by Friedman Billings, which cited valuation and the quality of the company's investment portfolio.
The conventional wisdom used to be that shoppers went looking for their favorite brands and that consistency of product packaging assured customer loyalty. Apparently marketers now have decided that good old reliable product packaging is making those products invisible to consumers. According to the New York Times, Pepsico (NYSE: PEP), known for its resistance to label design changes throughout its long history, is now changing some label designs every few weeks.
The problem is that, with the internet and hundreds of television channels, it's becoming increasingly harder for marketers to get their messages out to customers. Product packaging now has to do more than simply identify the goods within, but actually reach out and grab your attention. Hence, Mountain Dew bottles that appear to have been tagged by graffitti artists, or Unilever's (NYSE: UN) shampoo bottles shaped like video game joysticks. Target Corp. (NYSE: TGT) has been in the forefront of bringing eye-catching advertising to its themed store aisles.
There are other motives for this experimentation with product packaging as well. Some companies are searching for ways to reduce container sizes and to have less environmental impact. Some household product manufacturers are looking to make their once utlitarian packaging so pleasing that people may be willing to display it in their homes.
And it looks like things are only going to get weirder. Pepsi has a plan in the works for cans that spray a pleasing scent when opened. And you know that product packaging that talks to you can't be that far down the road. If you thought pop-up ads and TV commercials were annoying, just wait for the day you go into the shop and all the products are screaming for your attention.
Consumers these days are so lacking in confidence that 
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Wal-Mart Stores Inc. (NYSE: 
This week in .gif){kind=logo}
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