The consumer goods giant is pushing ahead with a reorganization program, which will result in both job cuts and productivity gains. It continues to operate in an uncertain macroeconomic environment, but remains on track.
Results above expectations
The group exceeded organic growth forecasts in the first quarter, with growth of 3% just above the expected 2.8%. This performance was driven by a 1.3% increase in volumes and a 1.7% increase in prices.
The personal care and beauty and wellness divisions, driven by Dove, are driving results upward. They recorded growth of 5.5% and 4.1% respectively and together accounted for 44% of quarterly revenue. Food accounted for 35%.
In the beauty and wellness division (+4.1%), the American brands Liquid I.V. and Nutrafol delivered double-digit growth for the group and drove growth in the wellness segment. However, beauty grew more modestly, penalized by declining demand in the United States and China.
In personal care (+5.1%), price increases (+2.4%) were well absorbed by consumers, boosting results.
Food down, ice cream up
In the food segment, value growth was saved by a 2.7% increase in prices, but volumes fell by 1.1%, their sharpest decline in five quarters.
In contrast, ice cream posted growth of 4%, well above last year's figure, driven by innovation and productivity gains. This momentum precedes the announced spin-off of the business. By the end of the year, The Magnum Ice Cream Company will become an independent company listed in Amsterdam, London and New York. The operational separation will be effective on July 1. It will bring together five of the world's ten largest sellers: Wall's, Ben & Jerry's, Magnum, Cornetto and Ola.
Reassuring geographical diversification
Unilever enjoys a sound geographical balance: no single continent represents over 50% of sales, although Asia remains the leading region. North America posted the strongest performance, with growth of 6.2%. All other continents contributed modestly to the increase in value. The group announced that it had only been modestly impacted by customs duties.
A strategy focused on productivity and innovation
The group says it is ahead of schedule with its productivity program, which aims to save €550m by the end of 2025. This strategy is accompanied by a restructuring program: 6,000 of the 7,500 job cuts planned have already been made, including 3,000 of the 10,000 office jobs in Europe.
Unilever has confirmed its targets for the year: growth of around 4%, with a margin of error of one point. The company is counting on innovation (with investments announced at 3% of sales) to sustain its long-term momentum.
However, risks remain: uncertainty about consumer spending, currency volatility, and raw material prices. The group is also continuing its share buyback program through the end of the first half of the year and will pay a dividend of €0.4528 per share.
The quarterly results confirm the relevance of the strategy focused on flagship brands. Dove, Liquid I.V., and Magnum all posted growth of over 8%.
Despite the generally optimistic outlook, several clouds remain on the horizon. Citi anticipates a 0.8% decline in margins in the first half of the year, as well as a negative impact of around 5% on earnings per share due to currency effects. Uncertainty surrounding the spin-off of the ice cream business also adds a dose of caution to the projections.
