Unilever, the consumer goods giant, saw its shares rise on Thursday as it raised its full-year margin guidance and confirmed that the spinoff of its ice cream business is on track to be completed by the end of 2025. The company’s stock climbed nearly 8% during the morning, settling around 5.45% higher by 10:14 a.m. in London. Unilever, known for brands like Dove, Axe, Hellmann’s, and Vaseline, reported sales growth across all segments in its first-half results published on Thursday.
Despite overall positive growth, Unilever’s ice cream segment faced challenges with just 0.6% sales growth and a 1% decline in volumes sold. This segment, which includes popular brands like Ben & Jerry’s and Magnum, makes up 15% of the company’s total turnover. Unilever’s CEO Hein Schumacher referred to the performance of the ice cream business as “disappointing” but expressed optimism about a sequential improvement in the future. The company announced plans to separate its ice cream unit back in March as part of an effort to streamline its business operations.
Unilever revealed that it raised prices across product categories early in response to inflationary pressures over the last three years. The company cited significant input cost pressures across agricultural products, energy, transport, and logistics as reasons for the price adjustments. Despite this, underlying price growth was only 1% in the second quarter of this year, substantially lower than the 8.2% growth seen during the same period last year. Unilever’s organic sales growth also fell slightly short of expectations, coming in at 3.9% compared to a forecasted 4.2% expansion.
Unilever emphasized its commitment to margin expansion in order to support its brands and increase marketing investments. The company’s strong gross margin progression in the first half of the year was driven by volume leverage and net productivity. Unilever’s margin growth exceeded expectations, leading to an uplift in its margin guidance for the full year. Analysts at Jefferies noted that this increased margin commitment would likely result in a significant boost to earnings per share, potentially rising by 7-8%.
Looking ahead, Unilever remains focused on driving margin expansion and investing in its key brands. The company acknowledged that some factors contributing to its first-half margin growth may not continue into the second half of the year. Despite this, Unilever’s CEO expressed confidence in the company’s ability to navigate challenges and capitalize on opportunities for growth. With the spinoff of its ice cream business on the horizon and a strong emphasis on margin expansion, Unilever aims to position itself for continued success in the ever-evolving consumer goods market.