Unilever impresses as sales soar in face of continuing consumer weakness
Unilever's second half results were ahead of market forecasts, as the consumer goods giant's pipeline of new products increasingly drives growth and margin expansion despite challenging markets.
Food Producers & Processors
8,272.80
13:40 08/05/24
FTSE 100
8,330.41
13:40 08/05/24
FTSE 350
4,578.05
13:40 08/05/24
FTSE All-Share
4,530.31
13:40 08/05/24
Unilever
4,233.00p
13:40 08/05/24
Underlying sales grew 2.9% in the three months to end-June, beating the consensus expectation of 2.6%, with volume up 1.1% and price up 1.7%.
Thanks to a positive currency impact of 9.6%, total sales growth for the quarter rose by an impressive 11.8% to €14.19bn, versus expectations of a 10.4% improvement.
For the first half, this meant underlying sales growth was also 2.9%, exceeding a consensus 2.7% estimate, and the top line was lifted 12% to a straight €27bn, helped by a 10% forex boost over the six-month period.
Although operating profit was down 13% to €3.8bn and net profit down 11% to €2.7bn, core earnings per share (EPS) was 16% higher at €0.91.
The company said consumer demand remained weak, with volumes flat in its markets. "Emerging markets continue to be subdued whilst in Europe and North America growth is negligible."
However, underlying sales growth was 6% in emerging markets, while across its four porduct categories growth was broad-based.
Refreshment growth came from price, while volumes drove the performance in home care and foods.
"The sharpened strategies across each of our four categories and a step-up in our innovation pipeline are increasingly driving our growth and margin expansion in a continued challenging environment," said chief executive Paul Polman.
Looking forward he added: "We plan for another year of volume growth ahead of our markets, steady improvement in core operating margin and strong cash flow."
Analyst Darren Shirley at Shore Capital was very impressed, with cost-cutting leading to margins comfortably ahead of his expectations and constant-currency core EPS growth of circa 8% in challenging global markets representing "a commendable delivery".
He added: "We see scope to nudge up our Unilever forecasts post todays results, primarily driven by the beat to core EBIT margin expectations. We currently forecast EPS of €1.83, which is predicated upon core EBIT margin expansion of 30bp."
At 09:19, Unilever shares were up 1.9% at 2,914p.