Unilever first half sales disappoint but profit and share price grow
26 Jul 2024 --- Unilever reports an increase in 4.1% sales, led by a 2.6% rise in volumes and a 1.6% increase in pricing in the first half of the year. Although sales growth missed expectations, shares jumped 6%.
The company’s power brands saw a 5.7% growth in underlying sales, with a 4% increase in volumes. Beauty & Wellbeing led with a 7.1% sales increase, driven by strong performance in Health & Wellbeing and Prestige Beauty. Personal Care and Home Care sectors also reported growth, with sales up by 5.6% and 3.3%, respectively.
Hein Schumacher, CEO, shares: “We are focused on driving high-quality sales growth and gross margin expansion, led by our Power Brands. Over the first half, we made progress on those ambitions.”
“Underlying sales grew, driven by a third consecutive quarter of positive, improving volume growth, while pricing continued to moderate in line with our expectations. Strong gross margin progression fuelled increased investment behind our innovations and resulted in a step-up in our profitability.”
“We continue to embed the Growth Action Plan, doing fewer things, better and with greater impact. The implementation of a comprehensive productivity program and the separation of Ice Cream are key to delivering on that commitment and we are progressing at pace.”
Due to investor pressure and a decline in profits, it was reported that Unilever would eliminate 3,200 positions in its EU offices by the end of 2025.
Hein Schumacher, CEO of Unilever.Beauty and personal care focus
Unilever says its key focuses within Beauty and Wellbeing are boosting core hair care and skin care brands to increase premiumization and growing the Prestige Beauty and Health & Wellbeing sectors with some international expansions.
Efforts in Personal Care will be led by “winning with science-led brands” across Deodorants, Skin Cleansing and Oral Care. “Our priorities include developing superior technology and multi-year innovation platforms, leveraging partnerships with our customers, and expanding into premium areas and digital channels,” says the FMCG.
“Rexona and Axe contributed strong volume growth with continued momentum from our multi-year innovation platforms and our Fine Fragrance range.”
Schumacher adds, “There is much to do, but we remain focused on transforming Unilever into a consistently higher-performing business.”
Regional performance
Unilever’s revenue, which comes from 59% of emerging markets, grew by 5.1%, with Latin America and Africa contributing significantly. Sales in China and South East Asia, however, decreased. Developed markets saw a 2.8% rise in sales, mainly due to improved performance in Europe and North America.
With the goal of improving operational efficiency and concentrating on key areas, the company is moving forward with its productivity program and the division of its ice cream business. Unilever has a positive outlook for 2024, with underlying sales growth of 3% to 5%, mostly driven by volume. The company anticipates a full-year underlying operating margin of at least 18%.
Financial details
Unilever’s turnover reached €31.1 billion (US$34 billion) — a 2.3% rise despite a 1.1% negative impact from currency fluctuations and a 0.7% decrease from net disposals.
Unilever’s underlying operating margin improved to 19.6%, and the gross margin increased to 45.7%.
With a focus on the company’s power brands, brand and marketing expenditures increased to 15.1% of turnover. Additionally, the company announced a 5.4% increase in diluted EPS and a 16.3% increase in underlying EPS.
By Venya Patel
