Consumer packaged goods giant Unilever (ULVR) delivered a mixed third-quarter performance but stuck with its full-year outlook despite underlying price growth moderating as inflation slows.

The Dove soap to Magnum ice cream maker also announced a new action plan designed to ‘drive growth’ and ‘unlock potential’ as new chief executive Hein Schumacher looks to make his mark.

A key area of focus is to arrest market share losses after the Marmite to mayonnaise seller said the percentage of its business taking market share has slipped to 38% from 41% at the half-year stage.

Investors were in shoot-first-and-ask-questions-later mode as the shares slipped 3% to £39, taking losses to around 7% since the start of this year.

HOW DID UNILEVER PERFORM?

Underlying sales growth in the quarter to 30 September was 5.2% with the bulk of the increase coming from price rises while volumes slipped by 0.6%.

Currency headwinds lopped 8% from sales, leaving reported sales down 3.8% year on year to €15.2 billion.

Emerging markets were a bright spot again, delivering both price and volume gains as underlying sales grew 8.3%, although the company noted China was recovering more slowly than anticipated with sales declining by a mid-digit percentage.

Beauty and Wellbeing performed strongly with underlying sales growth of 7.4%, while Personal Care saw growth of 8% as deodorant sales grew by double digits.

NEW ACTION PLAN

Schumacher conceded that while Unilever has strong fundamentals, with number one or number two category positions across 80% of its portfolio, the business has not delivered to its full potential.

‘We will drive faster growth by stepping up innovation and investment behind our Power Brands; we will drive simplicity and productivity, leveraging the full strength of our operating model; and we will sharpen our performance culture through strong leadership and stretching goals.’

Financial targets include achieving underlying sales growth of 3% to 5% with modest margin expansion and converting 100% of profit into cash.

The company is aiming to deliver total shareholder returns in the top third of its peer group.

WHAT ARE THE EXPERTS SAYING?

Russ Mould, investment director at AJ Bell commented: ‘Recently appointed Unilever CEO Hein Schumacher ruled out any big dramatic M&A activity as he outlined a strategy which included a management overhaul and increasing focus on 30 big brands such as Hellmann’s and Dove which account for 70% of turnover.

‘All of this seems pretty sensible, but it is not enough to get the market excited, particularly when combined with the mixed third quarter numbers.’

Matt Dorset, equity research analyst at Quilter Cheviot said: ‘Unilever delivered mixed results this morning, with price rises helping to drive sales growth in line with expectations, but unfortunately volumes were down.

‘As inflation continues to moderate, passing on price rises is going to become more difficult so Unilever will want to address those volumes.’

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (Ian Conway) own shares in AJ Bell.

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