Unilever Plc shares rose after it increased volumes and raised profitability in the first half of the year as Chief Executive Officer Hein Schumacher’s turnaround begins to gain some traction.
The Anglo-Dutch consumer group’s underlying operating margin was almost 20% in the first half, compared with around 18% expected by analysts. Volume growth also ramped up as some shoppers started buying more branded goods again as inflationary pressures eased.
Shares of Unilever rose as much as 7% in early trading in London. The stock is up about 11% in the last 12 months.
The Anglo-Dutch maker of Dove soap is in the middle of a shakeup which includes a potential spinoff or sale of its ice cream business and a cost-cutting initiative that will shed 7,500 jobs globally. Schumacher has also scaled back some of the company’s environmental and social goals, saying the previous targets were unrealistic. His turnaround plan aims to simplify the group and do fewer things better.
Schumacher said volumes had risen for the last three quarters in a sign some shoppers are spending more or switching back to branded goods, including “power brands” like Hellmann’s mayonnaise and Knorr stock cubes.
Sales growth in the first half, however, was tempered by falling prices in India and Indonesian shoppers boycotting western brands over the war in Gaza.
Unilever expects an underlying operating margin of at least 18% for the full year, but warned of slower growth in the second half. It also reiterated guidance of organic sales growth between 3% and 5% for the year.
Beauty, personal care and homecare continued to outperform nutrition, bolstering the argument for further restructuring of the group, including a potential disposal of the nutrition unit. Schumacher told Bloomberg Television he wants to further streamline the nutrition business which would focus on big condiment and cooking aid brands like Hellmann’s and Knorr.
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