Unilever hails best sales in more than a decade ahead of food business spin-off

Consumer goods giant Unilever has upped its annual outlook after notching up its best quarterly sales performance in more than a decade ahead of a £33.8 billion deal to spin off its food business.

The Marmite to Dove soap firm saw shares surge six per cent higher in morning trading on Tuesday after Unilever cheered a strong performance in its first half, with sales growth ramping up to 5.8 per cent in the second quarter.

This was driven by a 5.5 per cent jump in sales by volume – the highest underlying volume growth for more than 10 years.

Overall sales lifted 0.5 per cent in the first half and pre-tax profits rose 1.8 per cent to 4.66 billion euros (£3.98 billion) in the six months to June 30.

Susannah Streeter, chief investment strategist at Wealth Club, said: “Unilever’s results tell a story of a more resilient consumer and a company whose razor-sharp focus on power brands is paying off.

“While shoppers may be watching their wallets, amid renewed cost-of-living concerns, they are still making space in their baskets for brands they know.

“After several years when price increases did the heavy lifting, growth is now being driven by customers actually purchasing more products rather than simply paying more for them.

“Underlying sales growth accelerated to 5.8 per cent in the second quarter, ahead of expectations, with volumes doing the majority of the work. The company’s big names continue to have big pulling power and now account for 78 per cent of turnover.

“Products such as Dove and Vaseline have become household staples, and that brand loyalty is proving valuable at a time when consumers are becoming more selective about where they spend.

“Beauty and Wellbeing has remained one of the brightest spots, while Home Care has also provided support, highlighting the defensive qualities built into Unilever’s portfolio.

“There is built-in resilience in selling everyday products that consumers need because even when budgets are stretched, people still need to wash their clothes, clean their homes and take care of themselves.

“These results show that the focused strategy the company has been pursuing is paying off, as the sprawling portfolio of products has been trimmed back and marketing heft has been put behind the strongest brands.

“This strategy shows no signs of slowing down, with the company confirming it is full speed ahead with the move of the Foods business into a separate business with McCormick.

“While Unilever’s larder of food brands may contain some of the company’s most iconic household names, from Marmite to Hellmann’s mayonnaise, it is a weaker engine of growth.

“In the fourth quarter, underlying sales growth was 2.3 per cent with just 1.3 per cent from volume, compared with much stronger performances elsewhere in the business.”