Keeping the momentum going: Unilever reports sales growth in Q1 earnings

Multinational consumer goods company Unilever (NYSE: UL) released its latest financial results before markets opened today, on April 25th.

The company experienced better-than-expected underlying sales growth of 4.4%, with all five business groups reporting underlying sales growth, led by Beauty & Wellbeing (up 3.1%) and Ice Cream (up 2.7%).

Operating margin for the quarter was not announced, but the company said that it is "confident of delivering a modest improvement in underlying operating margin for the full year, reflecting higher gross margin and increased investment behind our brands."

Turnover increased 1.4% to €15.0 billion, with a 2.% impact from currency and 0.9% from net disposals.

The bottom line

However, the main question with Unilever, as well as its fellow consumer staples competitors, remains: what about sales volumes?

For the past few quarters, the company has been trying to balance flagging volumes of sales with higher prices - a potentially negative cycle in an environment of high inflation and no sign yet of interest rate cuts.

Encouragingly, volume growth increased to 2.2%. In particular, the company's main brands delivered 6.1% higher underlying sales growth, driven by a 3.8% rise in sales volumes.

Previous earnings

Unilever had several points to prove with its results today - not least of all if it could keep the momentum going on the turnaround evidenced in its Q4 earnings, with its 'growth action plan' gathering steam.

On February 8th, Unilever reported stronger-than-expected Q4 and FY 2023 results, thanks to sales growth across all its division and a shareholder-pleasing €1.5 billion share buyback scheme starting to be implemented. As a result, Unilever's stock price rose 3% on the day.

Still, 2023 had its fair share of issues for the company, including increased competition, skyrocketing raw material prices in a war-torn macro economy, and becoming a target for investors opposed to ESG issues. Perhaps as a result of this, the company's revenue for the quarter ending December 31st 2023 was €14.59 billion, a decrease of almost 5% year-on-year and the company's worst performance since 2020 and the pandemic. EPS was also down 1.4%, although sales for Q4 grew by 1.8% compared with Q3.