Unilever’s third-quarter sales increased more than expected, as its ice-cream business grew ahead of the spin-off next year.
FTSE 100, which includes brands such as Marmite and Dove soap, reported a underlying growth in sales of 4.5 percent during the third-quarter, marking its largest quarterly increase in sales for three and a quarter years. The slower price increases and new product innovation helped boost volume growth to 3.6 percent, beating City forecasts by 3.2 percent.
The group’s ice-cream business saw underlying sales grow by 9.8%, with volume growth of ice cream brands like Cornetto and Ben & Jerry’s increasing to 6.7 percent.
The group plans to spin off its ice-cream division at the end 2025 for an estimated £15 billion. Hein Schumacher said the plan is “on track”, and that a demerger was the “most likely” outcome.
Unilever is in talks with stakeholders, including the stock exchanges and tax authorities about a possible public listing of its ice cream division. The latest step in Schumacher’s turnaround effort is to revive the business. He was appointed last year as a restructuring specialist, replacing Alan Jope.
Unilever has been able to lure consumers back to its “power brands”, which include Dove Comfort and Magnum. The division’s underlying sales grew by 5.4 percent, and volume growth grew by 4.3 percent.
Unilever’s quarterly turnover remained at €15,2 billion despite currency and disposal headwinds. Unilever reported a “low single digit” drop in sales in China due to weak consumer demand.
Schumacher stated: “We’re still in the early stages when it comes to transforming our performance. We execute the growth plan at pace and are focused on doing less things better with greater impact.”
The company stated that its outlook for the full year was unchanged. Unilever is expecting to report sales growth between 3 and 5% and an operating margin of 18%. Unilever’s Russia exit strategy was better late than not
James Edwardes Jones of RBC Capital Markets said that the third-quarter results and the volume-driven growth are “a testament to how far Unilever has rehabilitated”.
Unilever has announced this month that it sold its Russian subsidiary for an estimated €520 million to a local manufacturer. This follows criticisms for the company not abandoning its operations in Russia following the invasion of Ukraine.
Schumacher stated that “at the end of it all, we decided to activate the exit option” because the uncertain climate in Russia made it difficult to exercise the necessary governance and control over the business.
Unilever sold its entire business in Russia, including four factories, and also the group’s interest in Belarus.
Unilever shares rose by 137p or 2.9 percent to £47.90.
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