26 October 2023
If you are covering Unilever’s latest financial results, please find below a comment from Matt Dorset, equity research analyst at Quilter Cheviot:
“Unilever delivered mixed results this morning, with price rises helping to drive sales growth in line with expectations, but unfortunately volumes were down. As inflation continues to moderate, passing on price rises is going to become more difficult so Unilever will want to address those volumes.
“It has announced a new action plan to improve performance and value creation, which includes targeting faster growth via innovation and investment in key brands, increased productivity and simplicity, and the creation of a performance culture. This will naturally take some time to feed into the bottom line, especially during a time when the macroeconomic environment is tough.
“Unilever continues to do well with volumes in the Beauty and Personal Care markets, whereas Home Care was flat and Nutrition and Ice Cream volumes were down and worse quarter over quarter. Europe continues to struggle economically and as such volumes are down 11% in that region, where ice cream sales were especially weak. Other regions did perform better and Latin America was particularly strong with 14% sales growth.
“Unilever currently trades on 18x this year's expected earnings, which is similar to its UK sector peers Reckitt and Haleon and probably fair given fairly flat earnings. However, it is less attractive when compared to top tier international competitors and ultimately the decline in volumes and loss in market share needs to be addressed. The new action plan will help, but demand for results will be challenging.”
