Unilever has beat its first-quarter sales forecast as it won back customers who had moved to cheaper products during high inflation, results showed today.
The maker of brands such as Dove soap and Hellmann’s mayonnaise saw shares rise more than 4% after it reported a 4.4% increase in underlying sales growth.
This surpassed analysts’ average forecast of 3%, given in a company poll.
Sales volumes rose 2.2% in a second quarter of growth after several declines.
Prices also increased by 2.2%.
Recovering Volumes
Consumer goods companies are fighting to recover volumes lost after months of material, transport and labour costs increased. This forced the companies to increase product prices in an attempt to maintain margins.
Prices initially rose due to the pandemic, which was followed by soaring energy costs when the Russian invasion of Ukraine began.
The chief executive of Unilever Hein Schumacher said in a statement, “We have increasing confidence in our ability to deliver sustained volume growth as we accelerate gross margin expansion.”
Unilever maintained its full-year guidance for underlying sales growth within its multi-year range of 3%-5%.
It added, however, that it expected volumes to increasingly drive its growth.
The company had previously guided for “more balance between volume and price.”
Unilever’s price hikes gradually slowed in 2023, a trend that continued into this year.
Growth Action Plan
After years of underperformance, the consumer goods giant unveiled a “Growth Action Plan” (GAP) in October.
The plan involves investing more in its top 30 brands that represent over 70% of sales supporting innovation and working towards a better operating discipline.
Jefferies analyst David Hynes said of the first-quarter results, “This is a useful print for company’s ‘GAP’ strategy credibility.”
This was informed by the fact that the company either bear or met organic sales growth and volume expectations in all divisions and regions.
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