- Unilever posted its strongest quarterly volume growth in more than 10 years.
- The consumer goods giant has raised its full-year sales outlook.
- The performance comes ahead of its planned £33.8 billion food business deal with McCormick.
Unilever has delivered its strongest quarterly sales performance in more than a decade, driven by shoppers buying more of its products rather than simply paying higher prices.
The consumer goods giant, whose brands include Dove, Marmite and Persil, reported 5.8 per cent underlying sales growth in the second quarter, fuelled by 5.5 per cent growth in sales volumes. The performance has prompted the company to raise its full-year outlook as it prepares to separate its food business in a £33.8 billion deal with US spice maker McCormick.
The stronger-than-expected update sent Unilever's shares up around 6 per cent in early trading.
More shoppers are filling their baskets again
For much of the past few years, consumer goods companies have relied on higher prices to protect profits as inflation squeezed households. This time, however, Unilever said its growth was largely driven by higher volumes, suggesting more consumers are buying its products.
The company reported first-half sales of £26.6 billion (€31.2 billion), up 0.5 per cent, while pre-tax profit rose 1.8 per cent to £4 billion (€4.66 billion). Operating profit increased 2.6 per cent to £4.2 billion (€4.89 billion).
Following the stronger quarter, Unilever said it now expects full-year underlying sales growth to fall within its medium-term target range of 4 per cent to 6 per cent, having previously forecast growth at the lower end of that range. It also increased its guidance for underlying volume growth to around 3 per cent, compared with an earlier forecast of at least 2 per cent.
Chief executive Fernando Fernandez reportedly said the company had delivered its best volume quarter in more than a decade, adding that the results reflected Unilever's ability to grow while reshaping its portfolio.
Beauty leads while food loses momentum
Not every part of the business performed equally well.
Unilever's food division recorded underlying growth of just 1.2 per cent during the first half, well behind Beauty and Wellbeing at 5.9 per cent, Personal Care at 4.8 per cent and Home Care at 7.6 per cent.
The company said tougher competition in the US condiments market and softer trading conditions weighed on food sales, although it is attempting to strengthen the business through premium products, including avocado mayonnaise.
The mixed performance comes as Unilever progresses with its planned £33.8 billion food joint venture with McCormick, combining brands such as Marmite with French's mustard. The transaction has faced criticism from some shareholders, who argued it should have been put to a shareholder vote.
Fernandez reportedly said the UK remains one of Unilever's most important European markets, with home care and personal care delivering a particularly strong summer performance.
Emily Sawicz, director and analyst at RSM UK, reportedly said Unilever's focus on beauty, wellbeing and personal care is strengthening its competitive position. However, she noted that sustaining growth in emerging markets while rebuilding momentum in developed economies would remain an important challenge.
The latest results suggest Unilever's recovery is being driven less by price increases and more by rising consumer demand, giving the company greater confidence as it prepares for one of the biggest changes to its business in recent years.
