25th Apr 2024 13:35
(Alliance News) - Unilever is taking decisive steps to improve performance, analysts said on Thursday, after the firm expressed "increasing confidence" in its restructuring plans amid a modest improvement in first quarter sales.
Shares in Unilever rose 5.8% to 4,085.00 pence each in London on Thursday.
The owner of Marmite, Dove soaps and Domestos said sales in the first three months of 2024 rose 1.4% to EUR14.96 billion from EUR14.75 billion a year prior.
Underlying sales grew by 4.4% including volume growth of 2.2%. Prices rises accounted for a further 2.2% of the increase.
Unilever said its 'Power Brands' which account for 75% of turnover delivered 6.1% underlying sales growth, driven by a 3.8% increase in volume.
Chief Executive Hein Schumacher highlighted "strong performances from Dove, Knorr, Rexona and Sunsilk."
"We are implementing the growth action plan at speed, focused on three clear priorities: delivering higher-quality growth, creating a simpler and more productive business, and embedding a strong performance focus. This is underpinned by our commitment to do fewer things, better and with greater impact."
He said the transformation is at an "early stage, but we have increasing confidence in our ability to deliver sustained volume growth and positive mix as we accelerate gross margin expansion."
The firm left its 2024 outlook unchanged predicting underlying sales growth of 3% to 5% and a modest improvement in underlying operating margin.
Analysts at Barclays were impressed.
"Unilever is making decisive steps to become a higher growth higher margin company and whilst early stages, our conviction continues to increase that this is the most compelling turnaround story in European Consumer Staples," the broker commented.
The broker thinks the market is underestimating the growth and margin potential of its Prestige and Health unit which this quarter has once again "powered" 5.6% volume growth in its bigger Beauty and Wellbeing division.
The other standout was the strength of Latin America volumes which were up a very impressive 8.1% this quarter, it said.
AJ Bell's investment director Russ Mould was also positive.
"There are signs of life in Unilever’s recovery under Hein Schumacher with the business benefiting from strong trading in its beauty brand and across its 30 leading ‘power brands’ where its resources are set to be focused."
"Despite coming in ahead of forecasts in the first quarter, Unilever is leaving its full-year guidance unchanged for now. A dose of conservatism is probably no bad thing as it leaves scope for Unilever to under-promise and over-deliver," he added.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Unilever