25 July 2023
If you are covering Unilever’s latest results, please find below a comment from Chris Beckett, head of equity research at Quilter Cheviot:
“Unilever’s latest results point to a company that is improving, but still has a long way to go before it can say it has caught up with rivals. On the positive side, sales and profits were better than expected and price rises have delivered a good set of numbers. Furthermore, volumes have been flat, and while that not might be much to write home about, it is far better than it has been for the consumer goods giant.
“Consumers continue to prioritise the likes of beauty and personal care products, happily spending on these in lieu of homecare and food/nutrition, where it is much easier to trade down. Especially in Europe, Unilever is seeing consumer weakness hit its bottom line, particularly as that region is more exposed to the likes of the ice cream and food markets.
“This is ultimately the challenge for the new CEO Hein Schumacher, who has only been in place for 3 weeks. Unilever is a very big company with the majority of it not doing very well and it is losing market shares as other consumer good giants take advantage of its woes. Some parts of the business are holding things together well but there is a lot to improve.
“Furthermore, while margins have recovered a bit, the inflation problem has not gone away despite improvements on that side. The recent attacks on Ukraine’s grain facilities will hit Unilever, and a reminder that inflation for consumers could be elevated for a while longer yet.
“Ultimately, these results point to a company that isn’t a bad one, but that there are better ones out there. There is a reason that Nestle trades at a premium to Unilever, particularly if you look at the share price over the long-term. Unilever remains in recovery mode and it might be some time yet before it is fully healed.”
