Unilever's Q1 Report: Mixed Signals for Investors

Unilever reports a slight dip in turnover for Q1, while underlying sales grew 3%. With challenges in certain segments, investors should watch closely as the company navigates a restructuring phase and prepares for its Ice Cream separation.

Date: 24-04-2025

AI Rating: 6

Turnover and Underlying Sales Growth
Unilever's reported turnover of 14.8 billion euros represents a decrease of 0.9% year-over-year, significantly attributed to a 2.7% drop from net disposals. However, the underlying sales did show resilience with a growth of 3%, driven by a combination of volume growth at 1.3% and price growth at 1.7%. This demonstrates the strength of Unilever's premium and innovation-led portfolio in developed markets, which is a favorable indicator for investors regarding future sales potentials.

Segment Performance
The report highlights growth in the Beauty & Wellbeing, Foods, and Ice Cream segments, while Personal Care and Home Care saw declines. For investors, this mixed performance requires a nuanced approach, focusing on segments that are currently driving growth. Given the brand strength in premium markets, sectors like Beauty & Wellbeing can potentially offer better margins.

Future Outlook
Unilever is maintaining its fiscal growth targets of 3% to 5% for underlying sales in 2025, and expects a modest improvement in operating margins. This outlook brings optimism for investors, particularly as it indicates foresight in the company’s strategic growth planning amidst a dynamic market environment.

Restructuring and Cost Savings
The company's ongoing productivity program, aimed at achieving savings of 800 million euros, coupled with a reduction of 7,500 roles, may indicate tightening operational efficiency. However, this comes with restructuring costs expected to be around 1.4% of group turnover in 2025, which investors should monitor for potential impacts on profitability.

Ice Cream Separation
The anticipated demerger of the Ice Cream segment, set to be operationally standalone by July 1, and reported as a discontinued operation thereafter, adds to the complexity of the company's structure. Investors should assess how this move will impact the overall valuation and operational efficiency of Unilever's remaining portfolio.

Stocks: UL ULVR.L