Consumer goods giant Unilever has posted third-quarter volume growth led by its ‘power brands’ on the back of pared price increases.
The Marmite, Hellmann’s mayonnaise and Ben & Jerry’s brands owner beat analysts’ sales, volume and pricing estimates for the quarter and has maintained its full-year sales outlook.
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Unilever, meanwhile, which is planning to spin-off its ice cream business, said plans to do so are on track before the end of next year.
Announcing its results today (24 October), the company, which is one year into a turnaround Growth Action Plan, said each of its business groups reported higher volumes year-on-year.
Speaking to analysts after the results were announced, CEO Hein Schumacher said: “It’s exactly a year since the launch of our Growth Action Plan. We made clear it was not a quick fix but we can be encouraged by the progress we have made to date.”
The turnaround strategy aims to cut costs of €800m ($863.9m) by 2027,
partly from shedding 7,500 employees across the business.
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By GlobalDataSchumacher said today the plan is “focused on doing fewer things better and with greater impact”.
It announced analyst-pleasing quarterly performance figures, which saw underlying sales up by 4.5% year-on-year and volumes up 3.6%, their biggest increase since the first quarter of 2021. Its core ‘power’ brands generated more than 75% of turnover and experienced volume growth of 4.3%.
CFO Fernando Fernandez told analysts: “Our power brands continued to be our engine for growth in Q3.”
Pricing was down to 0.9% in the quarter. At their peak in the fourth quarter of 2022, Unilever’s underlying prices rose 13.3%.
Today’s results surprised analysts who had expected a 1% increase in prices, a 3.2% rise in volumes and a 4.2% increase in underlying sales.
Turnover of €15.2bn was in line with the previous year.
Looking ahead, the company maintained full-year sales growth figures of 3% to 5%.
Its ice-cream business saw 9.8% growth in the quarter with 2.9% from pricing and 6.7% from volume.
Fernandez said: “Performance in ice cream is very important while we proceed with the separation. That is on track.”
In prepared remarks on the separation, the company said: “We are progressing with the legal entity set up, the stand-alone operating model and the carve-out of financials.”
In terms of developed markets versus emerging markets performance across the group, Unilever, which earlier this month confirmed it had disposed of its Russian subsidiary and its associated operation in Belarus, revealed developed markets, 43% of group turnover, grew underlying sales by 6.9% in the quarter with 6.8% from volume and 0.1% from price.
Emerging markets, 57% of group turnover, grew underlying sales by 2.9%, with 1.4% from volume and 1.5% from price.
Commenting on the results, Claudia Gilbert-Allen, an analyst with Barclays Investment Bank, said: “Overall, this is a strong result and we view this as the early innings of a multi-year turnaround story.”
