Top story
Unilever has missed growth expectations in its second quarter as prices softened and CEO Hein Schumacher continued with a turnaround plan.
Underlying sales growth in the three months to the end of June increased 3.9%, below analyst expectations for more than 4%.
Revenues in the first half rose 2.3% to €31.1bn, with underlying growth of 4.1% and volumes up 2.6%.
Power brands - which Unilever is focusing on in its new strategy - recorded underlying growth of 5.7% and a 4% jump in volumes in the half.
Underlying operating profits soared 17.1% in six-month period to €6.1bn as margins jumped 250 basis points to 19.6%.
The beauty & wellbeing division led the way on growth in the half, up 7.1%, while personal care increased 5.6%, nutrition was up 3.2% and ice cream nudged 0.6% higher.
“We are focused on driving high-quality sales growth and gross margin expansion, led by our power brands,” Schumacher said. “Over the first half, we made progress on those ambitions.
“We continue to embed the Growth Action Plan, doing fewer things, better and with greater impact. The implementation of a comprehensive productivity programme and the separation of ice cream are key to delivering on that commitment and we are progressing at pace.
“There is much to do, but we remain focused on transforming Unilever into a consistently higher performing business.”
Shares in Unilever soared 7% to 4,702.4p as investors reacted positively to the progress on profitability.
Morning update
Nestlé has downgraded full-year growth forecasts as prices started to come down from inflationary highs.
The Swiss food giant brought its organic sales growth expectations down from 4% to 3% this morning.
CEO Mark Schneider said: “Looking ahead to the remainder of the year, we will continue to drive real internal growth by launching innovations that address consumer trends and growing our large iconic brands. At the same time, we have seen pricing come down faster than expected.
“Therefore, we consider it prudent to adjust our guidance for the year.”
Organic growth in the first half stood at 2.1% for Nestlé, with real internal growth - stripping out the effect of pricing - of 0.1%.
Total reported sales declined 2.7% to CHF 45bn after currency headwinds.
Underlying trading operating profit decreased by -0.8% to CHF 7.8bn.
Profits at Virgin Wines have performed ahead of market expectations as revenues remained “resilient” in the year to 30 June.
Revenues were in line with the prior year at £59m, while enhanced margins and operational efficiencies, particularly in warehouse fulfilment, drove an improvement in profitability.
EBITDA increased by 260% to £2.8m and pre-tax profits expected to have moved from a £430k loss to £2m in the black, according to the full-year update.
CEO Jay Wright said he was pleased with the resilient sales performance despite a challenging consumer and inflationary market backdrop.
“We enter FY25 with the business performing well, and we remain confident for the future due to the strength of the underlying business model, our disciplined cost control and unique sourcing model,” he added.
British American Tobacco has continued to make progress with its transtion to next-generation products in its first half.
The group added another 1.4 million consumers to its smokeless brands, which now account for 17.9% of group revenue.
Reported revenues fell 8.2% to £12.3bn in the half as a result of the sale of businesses in Russia and Belarus in September 2023 and translational currency headwinds.
Traditional cigarettes remained under pressure, with sales in the category down 12.5% to £9.9bn.
New categories revenue was also down 0.4% to £1.7bn, but was up 7.4% on an organic constant rate basis.
Operating profits tumbled 28.3% in the half to £4.3bn.
CEO Tadeu Marroco said: “While there is more to do, we are making good progress and I am encouraged that our new category launches and our first-half investments to strengthen our US combustibles portfolio are gaining traction.
“Together with the expected unwind of US wholesaler inventory movements, I am confident this will drive an acceleration in our second-half performance.”
Tate & Lyle will tell shareholders at its AGM that it has made a good start to the new financial year with trading in line with expectations.
Volumes in the three months to the end of June are expected to be ahead of a year ago, with revenue lower as prices come down.
CEO Nick Hampton said: “It’s encouraging to see volume momentum across the business, and we continue to expect volume growth to accelerate as the 2025 financial year progresses.
“Planning for the integration of Tate & Lyle and CP Kelco is progressing well with both organisations excited about the opportunity to deliver significantly greater value for customers and the growth potential of the combined business. We look forward to the future with confidence.”
The FTSE 100 is down 0.7% so far to 8,093.09pts.
In contrast to Unilever, shares in Nestlé sank 4.3% to CHF 89.54.
BAT is up 2.5% to 2,638.5p in the early going, while Virgin Wines dropped back 4.2% to 41.2p and Tate & Lyle edged up 0.2% to 644p.
Yesterday in the City
The FTSE 100 made some gains on early losses to close the day down just 0.2% to 8,153.69pts.
Reckitt Benckiser shares had a see-saw day after it announced a major and wide-ranging restructure, including a sell-off of its homecare brands and baby formula nutrition business. After a strong start, the stock spent some time briefly in the red before recovering to end the day up 1.9% to 4,493p.
CPG group peer Unilever fell 1.1% to 4,397p ahead of today’s results.
Vimto owner Nichols soared 8% to 1,080p as it upgraded full-year profit forecasts and announced a £20m special dividend at the half-year results.
Greencore also jumped 2.8% to 184.9p on the back of an upgrade in its Q3 trading update.
Ocado gave up some of gains from earlier in the week, dropping back 5.1% to 408.9p.
No comments yet