27th Oct 2023 17:29
(Alliance News) - Unilever PLC will need to work hard to restore investor confidence, analysts at Barclays said Friday, though the investment bank believes it would be unfair to have wanted more "fireworks" from the consumer goods firm's new boss.
Unilever on Thursday said turnover in the third quarter was EUR15.24 billion, down 3.8% from a year before, though underlying sales growth was positive 5.2%. For the first nine months of the year, turnover was EUR45.78 billion, up 0.4% on year, with 7.7% underlying sales growth.
All divisions recorded lower turnover in the recent quarter. Beauty & Wellbeing was down 4.9%, Personal Care down 2.2%, Home Care down 4.1%, Nutrition down 2.4%, and Ice Cream down 6.5%. All divisions are up on the year in the first nine months as whole, other than Nutrition, which is down 5.7%.
Unilever said its 2023 outlook remains unchanged, calling for underlying sales growth above 5% and a "modest" improvement to underlying operating margin.
Focus was also on a subsequent analyst call, a chance for Chief Executive Officer Hein Schumacher to stamp some authority over the company.
"New Unilever CEO Hein Schumacher came across as credible, honest and humble around Unilever's challenges and opportunities. We felt his diagnosis was spot on but it will take time for momentum to build," analysts at Barclays commented.
"A big focus of the analyst call was mid term guidance of 3-5% [organic sales growth] rather than the top end of the guide. For us it's simply about execution and delivering the credible plan consistently and with real urgency. Whilst some may have expected more 'fireworks', the reality is this was always unlikely given the CEO is only 90 days in to the job."
Schumacher was picked as CEO in January and joined at the start of July. He replaced Alan Jope, who announced in September 2022 his intention to retire from the London-based consumer goods company. Jope's stint was marred by Unilever's failed tilt at GSK PLC's consumer health arm. The unit was then spun-out of GSK and named Haleon PLC. Unilever had attempted to acquire the unit for GBP50 billion.
Compared to other consumer goods firms, Barclays believes Unilever's record "doesn't stack up well" compared to peers over the past six years.
"Obviously the backdrop to these figures is Covid and the recent tsunami of inflation, but equally all FMCG companies have had to face the same challenges. In our view, Unilever has been inconsistent in the past which has eroded investor trust and conviction; that needs to change and fast," the investment bank added.
"For us the long-standing problem Unilever has faced over decades has been weak and inconsistent volume/mix growth. This, in our view, is the single more important KPI which drives value creation in the [fast-moving consumer goods] industry. We would like to see volume/mix specifically targetted in management incentives."
Unilever shares fell 1.7% to 3,833.50 pence each in London on Friday. The stock is down 2.1% over the past year, and 6.0% lower over the past five.
By Eric Cunha, Alliance News news editor
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