Unilever bemoans ‘disappointing’ year

Boss admits ‘there is much to do’ to transform business

THE boss of Unilever admitted ‘there is much to do’ after another ‘disappointing’ performance.

The consumer goods giant, whose brands include Marmite, Magnum ice cream, Domestos and Persil, said the volume of goods it sold rose just 0.2pc last year.

Overall sales were up 7pc to £51bn, however, after Unilever raised prices 6.8pc. Profits rose 2.6pc to £8.5bn.

‘Our competitiveness remains disappointing and overall performance needs to improve,’ said chief executive hein Schumacher, who has vowed to turn the FTSe 100 firm around after replacing Alan Jope in July.

‘We are at the early stages of this work and there is much to do but we are moving with speed and urgency to transform Unilever into a consistently higher performing business.’

An update which included the word ‘disappointing’ four times revealed it has been hit by weaker demand amid strain on family finances. Ice creams, including Magnum, Cornetto and Ben & Jerry’s, endured an especially disheartening performance with volumes down 6pc. european consumers traded down to supermarkets’ own-label goods at the expense of brands, Unilever said. And just 37pc of its businesses were winning market share – down from 48pc at the start of the year.

But the stock rose 3.2pc, or 123p, to 4024.5p – a four-month high – as investors welcomed positive developments such as the return of £1.3bn to investors through a share buyback.

In the final three months of 2023, Unilever said the volume of goods sold was 1.8pc higher than the same period a year earlier. It was the first time in ten quarters that quarterly volumes rose.

At the same time, prices were up just 2.8pc, the smallest increase since early 2021 and a clear sign inflationary pressures are easing. Price hikes peaked at 13.3pc in late 2022.

Its personal care division – brands such as Lynx and Dove – and beauty and wellbeing, which includes Vaseline, saw ‘strong’ volume growth. Jack Martin, a portfolio manager at Oberon Investments, said the ‘main takeaway’ was the buyback ‘ which has buoyed’ the share price.

he welcomed a ‘solid’ performance in the beauty and wellbeing and personal care divisions but ‘especially weak’ ice cream sales ‘might lead to speculation around potentially selling this business again’.

Schumacher defended Unilever against claims of profiteering and ‘ shrinkflation’, where the size of products is reduced but the price remains the same. he said there were times this could help shoppers, particularly if the alternative was keeping items the same size and jacking up the price.

‘I’m not saying shrinkflation is a good idea,’ he said. ‘I said it might make sense for consumers in times when they’re more cash-strapped.’

Unilever reduced its multipack of Magnums from four to three last March.

Amid mounting pressure to shake-up the company, including from activist investor Nelson Peltz, who is on the board, Schumacher is focusing on 30 ‘power’ brands which make up 75pc of turnover. These include staples such as Dove, Vaseline and Ben & Jerry’s.

Schumacher also said he will stop ‘ force-fitting’ social justice messaging onto brands as he seeks to concentrate on sales and profits.

Two years ago, Unilever was blasted by the investor Terry Smith for ‘ ludicrous’ virtue-signalling.