Unilever bemoans ‘disappointing’ year: Boss admits ‘there is a lot more to do’ to transform business
The Unilever boss admitted there was “a lot to do” after another “disappointing” performance.
The consumer goods giant, whose brands include Marmite, Magnum Ice Cream, Domestos and Persil, said the volume of goods it sold rose just 0.2 per cent last year.
However, overall sales rose 7 per cent to £51 billion, after Unilever raised prices by 6.8 per cent. Profits rose by 2.6 per cent to £8.5 billion.
“Our competitiveness remains disappointing and overall performance needs to improve,” said Chief Executive Hein Schumacher, who pledged to turn around the FTSE 100 company after replacing Alan Jopp in July.
“We are in the early stages of this work and there is a lot more to do but we are moving with speed and urgency to transform Unilever into a consistently higher performing company.”
Struggling: Unilever, whose brands include Marmite, Magnum Ice Cream, Domestos and Persil, said the volume of goods it sells rose just 0.2% last year.
The update, which included the word “disappointing” four times, revealed he had experienced weak demand amid pressure on the family’s finances.
Ice cream products, including Magnum, Cornetto and Ben & Jerry’s, saw a particularly disappointing performance with volumes down 6 per cent.
Unilever said European consumers were substituting its own brand goods for department stores at the expense of its brands.
Only 37 percent of its companies were winning market share – down from 48 percent at the start of the year.
But the stock rose 3.2 per cent, or 123p, to 4,024.5p – its highest level in four months – as investors welcomed positive developments such as £1.3bn returned to investors through share buybacks.
In the last three months of 2023, Unilever said the volume of goods sold was 1.8 percent higher than in the same period the previous year. This was the first time in ten quarters that quarterly volumes rose.
Meanwhile, prices rose just 2.8 percent, the smallest increase since early 2021 and a clear sign of easing inflationary pressures. The price rise peaked at 13.3 percent in late 2022.
The personal care division – brands such as Lynx and Dove – and the beauty and luxury division, which includes Vaseline, saw strong volume growth.
Jack Martin, portfolio manager at Oberon Investments, said the “key takeaway” was the buyback “which boosted” the share price.
He welcomed “strong” performance in the beauty, luxury and personal care divisions, but “particularly weak” ice cream sales could lead to speculation about the possibility of selling this business again.”
Schumacher defended Unilever against allegations of profiteering and “deflation”, where the volume of products is reduced but the price remains the same.
There are times when this can help shoppers, especially if the alternative is to keep items the same size and raise prices, he said.
“I’m not saying deflation is a good idea,” he said. “I said it might make sense for consumers in times when they are more financially strapped.”
Unilever reduced its range of Magnums from four to three last March.
Amid mounting pressure to shake up the company, including from activist investor Nelson Peltz, who is on the board, Schumacher is focusing on 30 “strong” brands that make up 75 percent of the business.
These include staples like Dove, Vaseline, and Ben & Jerry’s.
Schumacher also said he would stop sending “force-friendly” social justice messages to brands as he seeks to focus on sales and profits.
Two years ago, Unilever was harshly criticized by investor Terry Smith for its “ridiculous” virtue signaling.
(tags for translation) Daily Mail