- Resilient Q1 performance brings relief
- Full-year outlook reconfirmed
- US trade tariffs deemed ‘limited and manageable’
Deodorants-to-dishwasher tablets maker Unilever (ULVR) delivered marginally better-than-expected sales in the first quarter thanks to price rises and robust demand for its beauty, personal care and ice cream products.
There was relief as the FTSE 100 stalwart reiterated its full-year guidance and new CEO Fernando Fernandez sounded confident that growth will improve as self-help measures take hold in emerging markets such as Indonesia and China.
Unilever also insisted the direct impact of tariffs on profitability will be ‘limited and manageable’, news that nudged the shares up 0.5% to £48.37 in early dealings on 24 April.
SOLID SHOWING
Driven by volume and price, underlying sales growth of 3% marked a slowdown from the 4% generated in last year’s fourth quarter, but the performance was solid enough in the context of the tougher market conditions and fierce private label competition facing the company.
‘We have started the year with a resilient performance,’ insisted Fernandez, Unilever’s well-regarded chief financial officer who recently succeeded Hein Schumacher in the hot seat in a shock leadership reshuffle that suggested the board and shareholders felt Unilever should move faster.
‘First quarter underlying sales growth of 3% reflects the strength of our increasingly premium and innovation-led portfolio in developed markets. We have interventions in place in some emerging markets to step up growth in the remainder of the year,’ he added.
In terms of the divisions, Beauty & Wellbeing, Personal Care and Ice Cream proved the company’s top performers in the quarter, compensating for a weaker showing from Home Care.
Unilever’s Power Brands grew by 3% with strong performances in its largest brand Dove, which grew over 8%, as well as Vaseline, Liquid I.V., and Magnum.
PATIENCE REQUIRED
The Hellmann’s-to-Horlicks supplier reconfirmed its full-year 2025 outlook, guiding for underlying sales growth within the 3% to 5% range with a ‘modest improvement’ in underlying operating margins.
Unilever’s productivity programme is ahead of plan, and it is on track to complete the separation of its Ice Cream unit, which will be called The Magnum Ice Cream Company, in the fourth quarter of 2025.
Russ Mould, investment director at AJ Bell, commented: ‘It’s interesting to see new boss Fernando Fernandez now say that Unilever is “moving at pace” given the Q1 numbers do not support that statement. Patience is required and at least the current performance shows the business is moving forwards rather than backwards.’
Mould continued: ‘Importantly, the ice cream arm turned in a good performance, and that sets a positive tone ahead of its demerger later this year. There has been plenty of product innovation to excite shoppers and a lot of work has been done to improve operations before the division is set free from its parent.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Steven Frazer) own shares in AJ Bell.
