Unilever – volume growth returns as prices ease, €1.5bn buyback
- Full year underlying sales growth of 7.0%, volumes up 0.2%
- Expecting underlying sales growth between 3-5% for 2024
- Underlying operating profit up 2.6% to €9.9bn
- €1.5bn buyback announced
Matt Britzman, equity analyst, Hargreaves Lansdown:
“Volumes are growing again, led by Unilever’s biggest brands like Dove and Hellmans. Price hikes have come tumbling back down to earth, from the mammoth double-digit levels seen in the first quarter. Cost inflation is easing, meaning less needs to be passed on to consumers who were starting to trade away from Unilever’s higher priced products. The net impact was a more equal balance of price and volume growth in the latest quarter and a better outlook on margins moving forward.
There’s still a long way to go before Unilever’s refreshed leadership team can call mission complete on the turnaround. Competitiveness remains an issue, with only a little over a third of the portfolio gaining market share over the year. There doesn’t look to be a massive amount of scope for further portfolio changes at scale, so improvements from here will need to come from the focus on its largest brands and increased investment in brand awareness.
There are clear signs of progress, but even if the new strategy can deliver it’s only expected to return the group to sustainable growth within the old 3-5% range. Unilever remains a high-quality, cash-generative business. But the valuation, while under some pressure recently, is by no means cheap. Is the new strategy going to be enough to drive a longer-term valuation jump? Perhaps not.”
