June 6, 2023

Unilever has beaten quarterly sales forecasts by sending its shares up nearly 2% in early trading.

The home goods giant said first-quarter underlying sales were up 10.5% to €14.8bn (£13.1bn), beating analysts’ average forecast of a 7.2% increase.

This included a 10.7% increase in prices, although price growth was slower than in the previous two quarters, reinforcing signs that inflationary pressures may be easing.

Unilever, which makes a number of products including Marmite, Dove soap and Ben & Jerry’s ice cream, acknowledged that the current environment is “volatile and expensive” but said it expected another year of strong underlying sales growth.

Underlying operating margin in the first half of the year will be at least 16%, the company said, adding that it expects “modest improvement” by the end of the year.

Chief Executive Alan Jope said: “We have increased both the effectiveness of our innovation and the investment in our brands.

“We continue to shift our portfolio into higher growth areas, with the delivery of another quarter of double-digit revenue growth in prestige beauty and health and wellness, and the announced sale of Suave in North America.

“Our new business model encourages targeted resource allocation and unlocks a culture of bolder, faster decision-making and disciplined execution.

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“We remain focused on navigating ongoing macroeconomic uncertainty and are confident in our ability to deliver another year of strong growth, which remains our number one priority.”

Steve Clayton, head of equity funds at Hargreaves Lansdown, said: “This was a better forecast outcome from Unilever, who are proving adept at navigating the current challenging inflation environment.

“Sales were strong, but there was also good news on costs, where Unilever says pressures are no worse than led and are now expected to ease.

“Margins this year are estimated to be at least 16% and full year revenue growth will approach 5% or more.

“The portfolio is showing its strengths with positive volume growth on top of price increases in beauty and wellness, and personal care.

The group’s long-standing strengths in emerging markets are also helping them now, and as the Chinese economy continues to recover, this should become increasingly apparent.

“If there’s any weakness in the numbers, it’s coming from Europe, where growth remains weaker than elsewhere. A 3% volume decline in Europe held reported growth back to 9.2%. Hardly a disaster, but still proof that the Unilever marketing machine works better abroad than at home.”