In a recent report, Unilever’s shares experienced a notable uptick following the company’s announcement of third-quarter sales growth that exceeded forecasts. Trading at £48.43 per share, Unilever saw a surge of 4.1% in Thursday’s market activity. The firm’s underlying sales growth for the third quarter reached 4.5%, buoyed by a year-on-year volume increase of 3.6%. However, the trajectory of price growth showed signs of deceleration, clocking in at a modest 0.9% for the period. The group’s total turnover remained steady year-on-year at €15.2 billion, underscoring the challenges in the broader market environment.
Unilever attributed its growth to its portfolio of ‘Power Brands’, which hold a significant position in the company’s revenue streams and accounted for three-quarters of its total turnover. These flagship brands experienced an impressive underlying sales growth of 5.4%, benefiting from a 4.3% improvement in sales volume, with price growth contributing an additional 1.1%. Among the standout performers were the Dove soap, Comfort fabric conditioner, Magnum ice cream, and Liquid IV hydration solutions, all demonstrating strong sales figures throughout the quarter.
Notably, Unilever’s ice cream division emerged as the highlight of the third quarter, with underlying sales soaring by 9.8% due to a notable 6.7% improvement in volumes. The company praised operational enhancements, which included better distribution and optimized promotional efforts, as drivers behind this growth. The positive results in the ice cream division coincide with Unilever’s plans to spin-off this unit by the end of 2025, marking a pivotal strategic move for the company. Additionally, Unilever’s beauty and wellbeing division reflected strong growth, with underlying sales jumping by 6.7%, and personal care revenues increasing by 4.4% year-on-year.
Unilever’s performance in home care and nutrition also contributed to the overall growth, albeit at a slower pace, registering increases of 1.9% and 1.5%, respectively. Chief Executive Hein Schumacher remarked on the company achieving a fourth successive quarter marked by positive volume growth across all business groups. He expressed optimism regarding the outcomes stemming from the company’s ‘Growth Action Plan’, an initiative launched last year aimed at amplifying investment in Power Brands, elevating productivity, and reshaping the product portfolio to adapt more effectively to market demands.
Despite the favorable third-quarter results, Unilever maintained its full-year outlook, expecting underlying sales to align with its long-term projections of a growth range between 3% to 5%. The firm anticipates that most of this growth will be driven primarily by improvements in volume sales. In terms of profitability, the underlying operating profit is predicted to be approximately 18%, aided by a boost in brand investment. Analysts, such as Charlie Huggins of Wealth Club, commended the company’s solid performance, highlighting that volume growth was accelerating and the ice cream segment was particularly thriving.
However, Huggins also cautioned that while the actions taken by Schumacher seem to be yielding positive results, the journey toward increased productivity and organizational simplification is still ongoing. He highlighted that Unilever faces challenges in specific markets, notably Indonesia, which experienced a troubling double-digit decline in sales the previous quarter. This points to the ongoing volatility and complexity present within various regional markets that Unilever operates in as it pursues its growth agenda. Overall, while the company’s third-quarter sales growth signals strategic progress, further transformation efforts will be critical for sustaining momentum and addressing areas of concern.
