Unilever: Q3 sales steady, volume growth, moderate inflation

British personal care, cosmetics and food giant Unilever on Oct. 24 reported flat third-quarter sales from a year earlier, with price increases continuing to slow during the period despite higher volumes.

"We have delivered our fourth consecutive quarter of positive volume growth," said Unilever CEO Hein Schumacher. He added that while underlying sales were up 4.5 per cent, "price growth continued to slow, in line with our expectations."

Unilever sells a wide range of consumer products, including toiletries and personal care products Dove, Axe and Rexona, Vaseline and Pepsodent, skin care products Paula's Choice, and food Kourakot, Ben & Jerry's and household products.

The group reported turnover of €15.2bn in the third quarter. Specifically, sales declined in the Personal Care, Home Care and Nutrition segment, but increased 5.1 percent in the Beauty and Health segment and 8.1 percent in the Ice cream segment, both of which saw sales increase. Later this year, Unilever announced it would spin off the latter division, which includes brands such as Ben&jerry's, Cornetto and Magnum.

Under pressure to improve performance, especially from American billionaire Nelson Peltz, who has been a board member since 2022, Hein Schumacher unveiled a new strategic plan a year ago. He intends to boost the group's performance by focusing on 30 "strong brands", which together account for 70 per cent of the company's revenues. In addition, Unilever announced in March that it would separate its ice cream division and launch a cost-cutting program to boost margins, with plans to cut 7,500 jobs, or nearly 6 percent of its workforce.

"We are still in the early stages of our performance transformation as we rapidly execute our growth action plan," commented Mr. Schumacher. The program is focused on "doing less, doing better, and making a bigger impact," and the CEO believes the program is already starting to have a "positive impact."

Russ Mould, investment director at AJ Bell, said conditions are indeed improving for the consumer goods giant. "This performance was built on product innovation and improvement," he said.

However, as the economic environment changes, Unilever is slowing the rate of price increases. "This helps explain why the firm expects an overall slowdown in margin growth in the second half," Russ Mould added.

Unilever, which reports results only twice a year, reported a slight increase in net profit in the first half of this year. Volume growth has pushed its margins higher against a backdrop of slowing price growth.