Unilever raises its guidance following a strong first half and soars in Amsterdam

(Il Sole 24 Ore Radiocor) - Unilever is leading the way on the Amsterdam Stock Exchange, thanks to an upward revision of its guidance for the financial year after exceeding expectations in the first half of the year, driven by a sharp rise in sales volumes, particularly in the beauty and home care sectors. Shares in the Anglo-Dutch consumer goods giant recorded the biggest rise on the AEX index and were among the top performers on the Stoxx Europe 600.

For the full year, Unilever now expects like-for-like sales growth to be in line with its multi-year guidance, at between 4% and 6%, compared with the previous estimate of growth at the lower end of the range. Like-for-like volume growth is now estimated at around 3 per cent, compared with the previous forecast of growth of at least 2 per cent for the year. The second quarter performed particularly well, with like-for-like sales growth of 5.8% year-on-year, compared with 3.1% in the same period last year, excluding ice cream. Analysts’ estimates had forecast growth of 4.3%.

During the half-year, sales growth stood at 4.8%, driven by a 4.2% increase in sales volumes and a 0.6% rise in prices. Turnover rose by 0.5% to €25.6 billion in the first six months of the year. The group recorded organic growth of 4.5% in its beauty division, thanks to its flagship brands Dove and Vaseline, as well as organic growth of 7.4% in the home care sector, driven by Brazil and India, its two main markets. The underlying operating margin improved by 10 basis points in the first half of the year, reaching 20.3 per cent, thanks in part to the ongoing programme to improve productivity and reduce costs. Operating profit rose by 2.6% to 4.9 billion, whilst net profit fell by 3.5% to 3.3 billion euros. The group emphasises that it has completed the €800 million productivity programme launched in 2024 ahead of schedule.

Unilever also referred to the agreement signed last March with the US company McCormick to merge their food divisions, stating that it expects the transaction to be finalised by mid-2027 ‘at the latest’. “We delivered a solid, volume-driven performance in the first half of the year, with a significant increase in the second quarter – Unilever’s best quarter in terms of volumes in over a decade. Our leading brands continued to outperform, with all business groups recording volume-driven growth. Emerging markets showed momentum: India, Indonesia and Latin America all recorded strong growth, whilst North America once again outperformed its market,” commented CEO Fernando Fernandez, quoted in a press release. “The macroeconomic environment remains uncertain, but our consistency, discipline and excellent results in the first half of the year give us confidence that we are well positioned to achieve our upwardly revised full-year guidance,” added the CEO, who was appointed last year to accelerate the turnaround strategy, focusing the group on beauty and wellbeing brands.

According to analysts at Bernstein, the company may finally be seeing the light at the end of the tunnel. “After 18 difficult months, following the unexpected departure of former CEO Hein Schumacher and amid the volatility caused by the spin-off of the ice-cream division and the sale of the food business, these results – which have far exceeded expectations – should lead to a marked resurgence in optimism,” write the analysts at Bernstein. Unilever recorded exceptional volume growth in the second quarter, exceeding expectations, according to Barclays, which added that the acceleration in India, Brazil, and in the personal care and home care sectors was anticipated, but the scale of overall growth was very high. Results in the food sector were, however, more modest, but the overall results highlight that Unilever’s portfolio is capable of generating higher growth than that of many other global players in the consumer staples sector.