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Unilever says its shares will probably leave FTSE 100
Unilever has said its shares will probably leave the FTSE 100 index when the company scraps its dual Anglo-Dutch corporate structure.
Graeme Pitkethly, Unilever's chief financial officer, told a conference its new shares were "extremely unlikely" to remain in the FTSE UK indices. The consumer goods company has been "engaging very extensively" with FTSE Russell, which runs the index, he said.
"We understand and appreciate that a departure from the FTSE index has negative implications for some investors that are benchmarked to it. However, simplification is the right thing for the company and our shareholders as a whole," Pitkethly said, according to Reuters.
Unilever also flagged up lower first-half sales than expected because of transport disruption in Brazil. The company's shares fell 3.7% to £39.99 in London at 13:24 BST.
The maker of Dove soap and Pot Noodle decided in March to base its headquarters in Rotterdam and not London, ending months of speculation about its plans for a single corporate base. Unilever has operated as two companies with offices in London and the Netherlands since its formation in 1930.
Unilever, the third biggest company in the FTSE 100, is combining its Dutch and UK shares into a single class. Some UK investors are angry about the simplification plan, due for completion by the end of 2018, because they may be forced to sell their shares cheaply.
The company has said it will keep a premium listing in London and had hoped to persuade FTSE Russell that its shares should remain in the FTSE 100 despite the company being domiciled in the Netherlands.
"We would hope that those investors who are impacted have got sufficient flexibility in their portfolios to continue to hold Unilever," Pitkethly told the conference.
Unilever said a truck strike in Brazil reduced its sales by about 150m resulting in first-half sales growth below its full-year target of 3% to 5%. It stuck with the target for the full year.
RBC Capital Markets analysts said the impact of the strike, which is now over, was surprising because Brazil only makes up about 4% of Unilever's sales.
"We would regard an 11-day transport strike in Brazil as business as usual for a globally diversified [fast-moving consumer goods] conglomerate like Unilever," Edwardes Jones said in a note.
"That management feels the need to lower market expectations for 1H as a result indicates that there's nothing in the rest of the group doing sufficiently better than management's previous expectations to compensate."