Shares in consumer goods giant Unilever (ULVR) jumped to the top of the FTSE leader board with a gain of 3% to £39.41 after third quarter revenues beat analysts’ forecasts and the firm kept its full year outlook.

Group turnover for the three months to September was €13.5 billion against €12.9 billion last year, helped by underlying growth of 2.5% compared with estimates of a 2.1% rise.

Volumes were down 1.5% on last year due to a decline in beauty, personal care and home care sales, which faced tough prior-year comparisons, but the firm was able to make up the shortfall with average price rises of 4.1% across its product ranges.

On a nine-month basis, underlying sales were up 4.4% which puts the group well on track to meet its multi-year target of between 3%- and- 5% growth.


The firm achieved good progress in its three priority markets of the US, China and India, with China delivering a high single-digit improvement thanks to volume growth across all divisions and India growing by double digits as the country recovered from Covid-related impacts.

Underlying growth in the US was 2%, driven by ingredients, functional nutrition and the beauty business while in-home food and ice cream sales declined.

Latin America grew by high single digits thanks to price rises, while European sales were lower due to a surge in hygiene products and in-home food sales last year which meant a difficult comparison.

Impressively, the firm still posted underlying growth in all three divisions, not just against last year’s third quarter but against the same period in 2019 before the pandemic.


As well as gaining market share with its core brands, with Dove and Knorr posting 8% underlying growth and 9% respectively, the firm has thrown its weight behind new products to capture new markets.

The functional nutrition business registered 20% underling sales growth last quarter to reach €1.5 billion of revenues, and the vitamin and mineral supplement is on track to hit €1 billion as sales are rolled out in China.

The prestige beauty business registered an even more impressive 24% jump in underlying sales to reach €1 billion of revenues with 50% of purchases being made online. Again, a roll-out in China should see sales grow further in coming quarters.


Thanks to its ability to adjust prices to offset dips in demand and its significant cash-flow generation, Unilever has plenty of firepower to continue investing in core and new brands, which in turn drives sales.

Shareholders are also benefitting from the step-up in cash flow, as Bloomberg’s senior consumer analyst Deborah Aitken points out: ‘Free cash flow of £7.7 billion, up £1.5 billion in 2020, supports dividend recovery, a €3 billion buyback and reinvestment for growth.’

Broker sentiment was mixed, with analysts at JPMorgan for example reiterating their sell call while analysts at Goldman Sachs reiterated their buy call and £49 price target.


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Issue Date: 21 Oct 2021