Unilever fails to placate investors

After a “bruising few weeks” Unilever’s CEO Alan Jope (pictured) attempted to placate shareholders last week with a series of “red meat” offerings, says Oscar Williams-Grut in the Evening Standard. These include a new € 3bn share buyback, a 3% increase to the dividend, and a promise to rule out major deals, such as the botched bid for GSK’s consumer division.

Yet Unilever has some “serious questions to answer” that “won’t be magicked away” by a share buyback, says Ben Marlow in The Daily Telegraph. These include “how one of the FTSE 100’s biggest names keeps blindsiding its shareholder base”. Another is “what exactly is the strategy now that large-scale deals are off the table”. A third question that the board needs to tackle is whether “the obsession with social purpose has gone too far”, especially given that its share price has “stagnated” in recent years.

Unilever’s “supposed obsession with seeking purpose” isn’t the problem, says Nils Pratley in The Guardian. Modern consumers “expect brands to have a view on issues like food waste”. What is worrying is its “failure to convert those credentials into superior profits in the way that, say, Nestlé does”. More pressingly, Unilever needs to find a way to deal with the “serious bout of input cost inflation” that is arriving. Jope admits that margins are likely to “fall to 16%-17%, from 18.4% in 2021”, far below the “already abandoned target of 20%”. While investors will tolerate “temporary margin erosion in exceptional circumstances”, any long-term “diversion” risks “another uproar”.