Unilever experienced a significant increase in share prices on Thursday, following the announcement of an upward revision in its full-year margin guidance. The consumer goods giant also provided an update on the progress of the spinoff of its ice cream business, which is expected to be completed by the end of 2025. Share prices surged by nearly 8% in the morning, before stabilizing at a 5.45% increase by 10:14 a.m. in London. This positive movement reflects investor confidence in the company’s future prospects.
Unilever’s diverse portfolio of brands, including Dove, Axe, Hellmann’s, Knorr, Domestos, Marmite and Vaseline, drove sales growth across all segments in the first half of the year. The beauty and well-being category saw a robust expansion of 7.1%, while the ice cream segment lagged behind with only 0.6% growth in sales. This disappointing performance was attributed to a 1% decline in volumes sold. Unilever acknowledged the need for improvement in the ice cream division, which currently accounts for 15% of the group’s turnover.
In an effort to streamline its operations and enhance competitiveness, Unilever announced the separation of its ice cream unit, which includes popular brands such as Ben & Jerry’s and Magnum. The decision to focus on core areas like beauty and well-being, personal care, home care, and nutrition reflects the company’s commitment to delivering long-term value to shareholders. CEO Hein Schumacher emphasized the importance of driving volume growth, improving pricing strategies, and maintaining a competitive edge in the market.
Unilever’s proactive approach to managing costs and enhancing profitability was evident in the company’s decision to raise prices across product categories early in the inflationary cycle. This move was a response to surging input costs across agricultural products, energy, transport, and logistics. Despite facing challenges in pricing dynamics, Unilever demonstrated resilience by achieving a 1% underlying price growth in the second quarter of this year, compared to 8.2% in the same period in 2023.
While Unilever’s organic sales growth slightly missed analyst expectations, the company exceeded forecasts in gross margin performance for the period. Jefferies analysts noted that the margin guidance for the full year was revised upwards to “at least 18%”, signaling a strong commitment to margin expansion. This positive outlook is expected to drive earnings per share growth by approximately 7-8%, reinforcing Unilever’s position as a strategic investment opportunity in the consumer goods sector.
Unilever’s recent financial performance highlights the company’s ability to navigate market challenges and capitalize on growth opportunities. With a focus on margin expansion, brand revitalization, and operational efficiency, Unilever is well-positioned to deliver sustainable value to its shareholders. As the company continues to evolve its business model and optimize its product offerings, investors can look forward to long-term growth and profitability from this industry-leading consumer goods giant.