31 July 2025
If you are covering the latest financial results from Unilever, BAT or Haleon, please find below comments from Chris Beckett, consumer staples analyst at Quilter Cheviot:
Unilever
“Unilever delivered an okay set of results, but for a company that is in the middle of a turnaround with a new CEO at the helm, it is difficult to get particularly excited by these numbers. Sales grew 4% thanks to a mix of pricing and volume growth. However, margins and profit are both down and much of the sales growth is coming from the ice cream division, which is demerging from the company later this year. That isn’t an ideal situation to be in and Unilever will need to address its other divisions so they can take up the slack when ice cream does eventually leave the conglomerate.
“While profit is down, this quarter can be chalked up as a transitional one. The business is seeing growth, but that growth in itself is just fine. It does expect the second half of the year to do better, particularly in emerging markets, but for investors to get excited about the turnaround again it will need to produce better margins and better volumes to help account for that loss in earnings from ice cream.”
BAT
“This was a messy set of results from BAT as it struggles to get the transition to smokeless products quite right. Revenues were up 2%, but cigarette volumes were down 9% - the traditional situation for tobacco companies as they hike prices to account for fewer people smoking. The new categories are helping but only one is really firing on all cylinders – its nicotine pouches division. Its vaping brand is struggling with elicit products coming out of China, while heated tobacco too has not seen the growth the business would have liked. These transition products were meant to be doing much better at this stage, but for BAT it is struggling to get them to produce.
“However, what BAT continues to do well is generate cash and this continues to be returned to shareholders. There is a good story for investors happy with exposure to the sector, but BAT isn’t quite selling itself enough. The share price has done very well over the past year, but there is arguably more that could be done to up the valuation further. Philip Morris has shown what is on offer if you do execute the transition strategy well and BAT needs to strive to get there. For now, it is a case of things are fine, but could be a lot better.”
Haleon
“Haleon produced a disappointing set of results with sales in North America going backwards. Indeed, it is very much a story of the US market driving weak sentiment for investors as all of its divisions bar toothpaste struggled. Management called out a weak US consumer and tough US retail environment for those struggles, but the company will need to stop the slide regardless of the economic picture to get back to its targets. It’s guidance for the rest of the year was also slightly behind what it has been targeting as part of its strategy, and this has just given investors reason to take a pause on the company and as a result the share price has weakened.”
