ii view: Unilever confident about 2025 under new boss

First-quarter results to 31 March

• Adjusted sales up 3% - volumes up 1.3% - prices up 1.7%
• Q1 dividend of €0.4528 per share, unchanged from Q4 2024 and up 6.1% from Q1 2024
• Ongoing €1.5 billion share buyback

Guidance:

• Continues to expect full-year underlying sales growth of between 3% to 5%
• Expects a modest improvement in the underlying operating margin for the full year vs 18.4% in 2024

Chief executive Fernando Fernandez said: 

"We have started the year with a resilient performance. 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.

“Creating desirability at scale for our brands and brilliant in-market execution are the pillars of our plan to turn Unilever into a consistently higher performing business. We are moving at pace, confident in making progress in 2025 and beyond."

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ii round-up:

Unilever (LSE:ULVR) is major provider of consumer goods across the five areas of Beauty and Wellbeing, Personal Care, Home Care, Foods, and Ice Cream.

The ice cream business is scheduled to operate as a standalone business from the 1 July, obtaining its own stock market listing during the fourth quarter of 2025. 

Unilever’s many brands include Dove, Sunsilk, Domestos, Cif, Comfort, Hellmann’s, Hollicks and Knorr. Brands for the soon to be ‘Magnum Ice Cream Company’ are Magnum itself, Ben and Jerry’s and Wall’s. 

For a round-up of this latest trading update announced on 24 April, please click here. 

ii view:

Sold in more than 190 countries, Unilever products are used by around 3.4 billion people every day. Sales are divided relatively evenly between the four remaining divisions, and with the ice cream business being the smallest at just under 14% in 2024. Geographically, emerging markets account for 58% of sales and developed markets 42%. Notable individual countries include the US at 21% of 2024 sales, India at 11% and the UK at 4%. 

Likely driven by activist investor Nelson Peltz, Unilever has been pursuing a growth action plan, simplifying activities and the number of products sold, as well as pushing improvements in productivity.  

For investors, the tough economic backdrop for many of its customers globally persists. Some impact from trade tariffs is expected, if only small. A forecast price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap. Competitors such as Procter & Gamble Co (NYSE:PG) are not standing still, while currency movements can impact performance. 

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On the upside, relatively new head Fernando Fernandez was appointed with the remit of making changes quickly and putting Unilever back on a firmer footing. The pending exit from ice cream will increase the board’s focus on remaining businesses. Around €550 million of an €800 million cost saving programme are expected by year-end, while the dividend yield is around 3.3%.

In all, and despite ongoing risks, strong brands and a self-help programme continue to leave this consumer goods giant worthy of its place in many investor portfolios.  

Positives: 

• Diversity of products and geographical regions
• Cost saving programme

Negatives:

• Pressured consumer incomes
• Discount retailers often only stock their own branded labels

The average rating of stock market analysts:

Cautious buy