Unilever has posted a slightly better-than-expected rise in sales and the biggest gain in volumes in over three years after winning back shoppers with product innovation and slower price increases.
During its third quarter, the consumer goods giant saw its underlying sales increase 4.5% to €15.2bn, beating analysts’ forecast of 4.2% and up on the 3.9% rise recorded in the previous 13-week period.
Underlying price growth was 0.9%, while sales volumes rose 3.6%, the biggest increase since the first quarter of 2021 when Unilever reported a 4.7% rise. Analysts had expected a 1% increase in prices and a 3.2% rise in volumes for the third quarter.
Unilever noted that its so-called Power Brands (>75% of turnover) drove growth during the quarter with a 5.4% rise in sales and 4.3% uplift in volumes. Brands with particularly strong performances included Dove, Liquid I.V., Comfort, and Magnum, as the group upped the focus on its core lines as part of CEO Hein Schumacher’s plan to accelerate Unilever’s growth.
In its Beauty & Wellbeing unit, underlying sales grew 6.7%, with volume growth of 5.7%. The group noted that its Health & Wellbeing and Prestige Beauty combined delivered a fifteenth consecutive quarter of double-digit, volume-led growth.
Personal Care grew 4.4% with 3.1% from volume, driven by a strong performance of Dove brand. Home Care underlying sales increased by 1.9%, with 3.3% volume growth offsetting continued negative price growth linked to commodity cost deflation.
In Unilever’s Nutrition unit, underlying sales were 1.5%, after muted volume growth of 0.4% amidst moderating prices and a market slowdown. Ice Cream grew 9.8%, with 6.7% from volume and 2.9% from price. The group noted that the improved performance reflected a focus on operational improvements alongside product innovation.
In a statement today, Schumacher said: “We are still in the early stages of transforming our performance as we execute the Growth Action Plan at pace – focused on doing fewer things, better and with greater impact. We are starting to see the positive impact from scaling fewer, bigger innovations across our markets supported by increased brand investment. We are taking decisive actions, where we see operational or market challenges to ensure we are well positioned for consistent and improved performance.”
He concluded: “We are on track to deliver our 2024 outlook and are confident that the steps we are taking will help to transform Unilever over time into a consistently higher performing business.”
The company stated that it was keeping its full-year outlook for 3-5% underlying sales growth, with this expected to be driven by volume. Meanwhile, underlying operating margin is on track to be at least 18%, with “increasing investment behind our brands”.
As part of its transformation plan, Unilever is implementing a major productivity programme and splitting off its Ice Cream unit. It confirmed today that the separation activity was on track to be completed by the end of 2025, with it progressing with the legal entity set-up and the standalone operating model.
In July, Unilever outlined plans to cut around a third of all roles in its offices around Europe as part of moves to simplify the business and evolve its category-focused operating model. It said today: “We have started the implementation in those countries where the consultation with the respective works councils completed.”
NAM Implications:
- So innovation works, as always…
- Unfortunately, the ground needs clearing so that the ‘green shoots’ can flourish more obviously.
- So anticipate more moves towards core business optimisation and necessary cuts.
- Watch his space…
