Shares in Unilever picked up after the business reported forecast-beating sales growth for quarter three
At £48.43 per share, the fast-moving consumer goods (FCMG) giant was last dealing 4.1% higher in Thursday trade.
Unilever’s underlying sales growth was 4.5% in the third quarter, with volumes improving 3.6% year on year.
However, the rate of price growth continued to slow, hitting 0.9% during quarter three.
Group turnover was flat year on year, at €15.2 billion.
Performance was driven by Unilever’s ‘Power Brands’ stable of goods, which account for three-quarters of total turnover.
Underlying sales growth among these heavyweight labels registered at 5.4%, helped by a 4.3% volumes improvement in the period.
Price growth contributed 1.1% to the third-quarter rise.
Unilever picked out its Dove soap, Comfort fabric conditioner, Magnum ice cream and Liquid IV hydration solutions as particularly strong performers during the quarter.
Strength In Depth
Unilever’s ice cream division was the standout performer in quarter three. Underlying sales rose 9.8% thanks to a 6.7% pickup in volumes.
The FTSE 100 firm said that the increase “was driven by operational strengthening, including distribution gains and optimised promotional activities, alongside strong innovations.”
Unilever confirmed that it remains on track to spin-off its ice cream unit by the end of 2025.
Its beauty and wellbeing division enjoyed a third quarter underlying sales rise of 6.7%, while corresponding personal care revenues increased 4.4% year on year.
Home care and nutrition underlying sales increased 1.9% and 1.5% respectively.
Another Quarter Of Growth
Chief executive Hein Schumacher commented that “we have delivered a fourth consecutive quarter of positive, improved volume growth, with each of our business groups driving higher volumes year-on-year.”
He added that “we are starting to see the positive impact” from Unilever’s ‘Growth Action Plan,’ under which the company is “scaling fewer, bigger innovations across our markets supported by increased brand investment.”
Unilever launched its ‘Growth Action Plan’ last October to boost Power Brand investment, improve group productivity and reshape its portfolio.
The firm kept its full-year forecasts unchanged following the bright third quarter. It said it expected underlying sales “to be within our multi-year range of 3% to 5%, with the majority of the growth being driven by volume.”
Underlying operating profit, meanwhile, is tipped to come in at 18%, helped by rising brand investment.
“Solid Performance”
Analyst Charlie Huggins of Wealth Club said that “this is another solid performance from Unilever with volume growth accelerating, and an improved performance in ice cream. It provides further encouragement that Hein Schumacher’s ‘Action Plan’ is working.”
He added that “operational execution is improving and there is a much greater sense of urgency and dynamism. This provides growing confidence that Unilever is now on the right track.”
However, Huggins cautioned that “Schumacher’s work is certainly not done,” commenting that that “there is a long way to go on productivity and simplification to make Unilever a leaner, meaner business.”
Huggins also noted that Unilever’s Indonesian market remains problematic after a double-digit sales decline last quarter.
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