Unilever plans Ragu sauce sell-off to focus on smaller number of core products
Consumer goods giant Unilever is looking to ditch its Ragu sauces brand as part of its plans to focus on a smaller number of core products.
The firm behind Magnum ice-cream, Persil and Marmite hopes to raise £1billion from the sale of the pasta sauce which it owns in America, having already sold the UK operation three years ago.
It used a strong set of first quarter figures to say it was ‘undertaking a strategic review of our North America pasta sauces and the Slim Fast brand’, which was consistent with its commitment to ‘rigorously review’ its store cupboard of brands.
Sell-off: Unilever hopes to raise £1billion from the sale of Ragu
Chief executive Paul Polman is keen to expand Unilever – which also owns Dove soap and Lynx deodorant – into personal care products which make higher profit margins.
But finance director Jean Marc Huet said the review might not lead to a sale: ‘We’re looking at all options. It may lead to a disposal but it doesn’t necessarily have to.’
Unilever has already sold Peperami and Skippy.
While underlying sales growth rose a higher than expected 3.6 per cent for the first quarter, the firm is the latest multinational to be hit by the strength of the pound.
It blamed worse than expected currency movements on total sales falling 6.3 per cent to £9.3billion, joining others, such as Burberry, in warning of future hits from exchange rates.
Shares in Unilever fell 44p to 2590p despite a 6 per cent hike in the quarterly dividend to 0.23p.
The worst-preforming business was food in which underlying sales growth fell 1.7 per cent.
Polman said this was largely because of the late timing of Easter. ‘The decline of the margarine market remained a drag on our... spreads growth but we are now gaining market share in margarine in both Europe and North America,’ he said.
He also signalled that he would not be following rival Procter & Gamble in hiking prices in the crucial emerging markets. Polman said: ‘Emerging markets are currently passing through a period of slower demand and economic volatility but our strategy remains unchanged.’
Martin Deboo, an analyst at broker Jefferies, said: ‘The first quarter was a modest beat on organic growth. Highlights for us were strong volumes in Europe, reflecting market share gains and early signs of a revival in spreads.
‘But the big picture is one of still-slow grinding, in both developed & emerging markets.’
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