Beauty boosts Unilever’s bottom line amid backlash over plans to trim ESG efforts

25 Apr 2024 --- Unilever’s stock rises on the London Stock Exchange after the company posted better sales than expected with the beauty division leading the way and consumers returning to pricier, brand-name products. The earnings results follow a backlash over the FMCG giant’s plans to pull back on environmental and social efforts.

Hein Schumacher, CEO of Unilever, says his plan to turn around the company is working: “Unilever delivered improved volume growth in the first quarter. This was driven by our Power Brands, which saw underlying sales growth of 6.1%, with strong performances from Dove, Knorr, Rexona and Sunsilk.”

Beauty boom
Unilever’s Beauty & Wellbeing category grew underlying sales by 7.4%, with volume growth of 5.6% driven by the Health & Wellbeing and Prestige Beauty sector. Compared to the same period, Personal Care grew by 4.8%, up 1.4% in volume. Home Care experienced an underlying sales increase of 3.1%, with 4.3% volume growth. 

The company emphasizes that Personal Care is focused on Deodorants, Skin Cleansing and Oral Care. The segment’s underlying sales grew by 4.8%, with 1.4% from volume and 3.4% from price.

Deodorants grew double-digit with “high-single-digit” volume growth. Skin Cleansing was flat, with low-single-digit price offset by volume declines. Dove grew “high-single-digit” with mid-single-digit volume growth. Oral Care grew mid-single digits, with “positive volume and price,” led by double-digit growth in Closeup.

Unilever’s 2024 guidance remains unchanged, expecting underlying sales growth for 2024 to be within its multi-year range of 3% to 5%, with an increasing contribution from volume growth.

Underlying sales growth in the quarter was 4.4%, with balanced volume and price growth. Underlying volume growth increased to 2.2% from 1.8% in Q4 2023, while underlying price growth of 2.2% moderated slightly from 2.8% in the previous quarter. The Power Brands continued to perform strongly, with 6.1% underlying sales growth, underpinned by volume growth of 3.8%.

“Unashamedly realistic” change
Schumacher recently said Unilever would scale back or eliminate some environmental and social pledges, which, for years, the company proudly touted under previous CEOs. He took the reins last summer and announced shortly thereafter he would return the company to profitability by doing away with “non-core” assets and strategies.

Unilever tells Personal Care Insights: “Our updated commitments are very stretching, but they are also intentionally and, unashamedly, realistic.”Unilever plans to scale back or eliminate some environmental and social pledges to return to profitability.

“We are determined that Unilever will deliver against them, just as we are determined to perform against our financial goals. We want to set sustainability ambitions which are credible, which we believe we can deliver against, and which have a real positive impact.”

“At Unilever we want to do fewer things with greater impact. Our refreshed sustainability agenda — with more focus, urgency and systemic change — is no exception.”

While Unilever’s CEO confirms plans to reduce the company’s pledges on environmental issues, including plastic usage and pay, critics, including Greenpeace, believe the board should “hang their heads in shame.” We reached out to Greenpeace and are awaiting further comment. 

Unilever is removing a pledge to pay direct suppliers a “living wage” by 2030, instead proposing fair pay for suppliers accounting for half its annual spend on goods and services by 2026. It also took away a commitment to spend €2 billion (US$2.1 billion) a year with diverse businesses and that 5% of its workforce will comprise people with disabilities by 2025.

Earlier this year, Greenpeace protestors surrounded Unilever’s headquarters in London, UK, to demonstrate against plastic pollution. The organization called on Unilever to stop the sale of sachets used for products such as Dove shampoo. 

By Sabine Waldeck