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April 25, 2024

Unilever Exceeds Q1 Sales Expectations as Customers Return to Iconic Brands

Unilever, the conglomerate behind renowned brands like Dove and Hellmann’s, surpassed first-quarter sales projections on Thursday, showcasing a remarkable 4.4% increase in underlying sales growth. This impressive performance signifies a notable resurgence of customers who had previously opted for cheaper alternatives amidst the recent surge in global inflation.

The company’s shares soared by more than 4% following the announcement, outstripping analysts’ average forecast of 3% in a company poll. Sales volumes also climbed by 2.2%, marking the second consecutive quarter of growth after several declines. Prices experienced a parallel increase of 2.2%.

In the wake of months of price increases, consumer goods companies have been grappling to regain volumes lost. These price adjustments were initially triggered by the pandemic and were further exacerbated by soaring energy costs post-Russia’s invasion of Ukraine.

CEO Hein Schumacher expressed confidence in the company’s ability to sustain volume growth while accelerating gross margin expansion. “We have increasing confidence in our ability to deliver sustained volume growth as we accelerate gross margin expansion,” Schumacher stated in a release.

Unilever has maintained its full-year guidance for underlying sales growth within the 3% to 5% range, but with an emphasis on expecting volumes to play an increasingly pivotal role in this growth trajectory. Previously, the company had projected a more balanced approach between volume and price.

The gradual slowing of the company’s price hikes in 2023 continued into the first quarter of this year, indicating a positive trend for consumers.

Following years of underperformance, Unilever introduced its “Growth Action Plan” (GAP) in October. This initiative involves heightened investments in its top 30 brands, which collectively contribute over 70% of sales. It also focuses on fostering innovation and improving operational discipline.

Jefferies analyst David Hayes described the first-quarter results as a testament to the credibility of the company’s ‘GAP’ strategy. Unilever either exceeded or met organic sales growth and volume expectations across all divisions and regions.

The robust performance in the first quarter underscores Unilever’s resilience in navigating through challenging market conditions. With a strategic focus on brand strength, innovation, and operational efficiency, Unilever appears well-positioned to maintain its growth momentum in the face of ongoing economic uncertainties.

Jhumpa Lahiri

Jhumpa Lahiri

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