27th Oct 2022 16:01
(Alliance News) - Unilever on Thursday reported strong growth across all its units in the third quarter of 2022, but despite this, analysts expressed concern for the company's future growth against a backdrop of squeezed household budgets and rising cost pressures.
In the three months ended September 30, the consumer goods maker, known for brands such as Dove soap and Ben & Jerry's ice cream, turnover rose 18% to EUR15.8 billion from EUR13.5 billion a year ago.
All of its units reported double-digit turnover growth, expect for the Nutrition segment which still recorded 4.8% growth.
"Price growth has sequentially improved in each of the past seven quarters, reaching 13% in the third quarter. While pricing had, as expected, some negative impact on volume, underlying volume growth improved in four business groups compared to the second quarter," Unilever explained.
Matt Britzman, an equity analyst at Hargreaves Lansdown, said the 1.6% drop in volumes over the third quarter wasn't "all that bad" given that we've been seeing "other names in the wider industry" raising prices.
"Keeping volumes ticking higher is beginning to become a mammoth challenge," he said.
For Laith Khalaf, head of investment analysis at AJ Bell, the figures highlighted an "extremely bleak consumer outlook in both emerging and developed markets".
Unilever Chief Executive Officer Alan Jope admitted that the global macroeconomic outlook remains "mixed" and said the expects the "challenges of high inflation to persist in 2023".
Susannah Streeter at Hargreaves Lansdown said there were still "big pockets of consumer resilience as outlined in Unilever’s results", even as the company was able to pass on price rises.
Streeter warned that "as the cost-of-living screws are turned tighter and recession bites, risks that shoppers will drift away to cheaper brands are rising".
Victoria Scholar, head of investment at interactive investor, concurred: "Similar to its rivals like Reckitt Benckiser, the biggest risk for Unilever is if consumers trade away from branded products to cheaper alternatives instead."
Reckitt Benckiser Group PLC on Wednesday had reported strong revenue growth in the third quarter, but a decline in volumes for the hygiene, health and nutrition firm led analysts to wonder how hard the cost-of-living crisis will hurt it.
In the third quarter, Reckitt said total revenue grew 14% year-on-year to GBP3.74 billion, or 7.4% on a like-for-like basis. Volumes, however, declined by 4.6% - a similar story to Unilever.
ii's Scholar remained confident in Unilever. "As a vendor of consumer staples, Unilever is relatively well positioned to weather an economic downturn."
Unilever was down 0.4% at 3,854.50 pence on Thursday afternoon in London. In the year-to-date, the stock is down 3.5%.
By Heather Rydings; [email protected]
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