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Home / Blog / blog / Company Focus || All Washed Up for Unilever? || 20-12-19

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Company Focus || All Washed Up for Unilever? || 20-12-19

Beauty and cleaning brand giant, Unilever saw its share price tumble by more than six per cent after it revealed a slowdown in sales growth this week. The group, which manufactures a diverse range of products from Dove soap to Magnum ice creams, announced it expects underlying sales growth for the full year and the first half of next to fall below previous guidance in the lower half of the 3-5% multi-year range.

So, is this the start of troubling times for this household name or is this dip a good entry point for potential investors? While sales have slowed – which the brand has partly blamed on economic slowdown in South East Asia, one of its largest markets – Unilever has an impressive global reach which should help to counter negative headwinds. Its share price stands at 4,336p at the time of writing and it still holds the accolade that, on a typical day, a third of the world’s population will use one of its products.

However, its share price fall this week makes it the worst performing stock on the UK 100 and widens the gap between Unilever and competitors Nestle and Proctor and Gamble, whose share prices are up this year 37 and 23 per cent respectively.

Underlying sales rose 2.9 per cent for the third quarter, broadly in line with expectations, with growth coming from increases in both volume and price. Beauty and personal care delivered a 2.8 per cent rise in sales, with deodorants performing particularly well, and food and refreshment showed growth of 1.7 per cent. Home care showed particularly strong growth, up 5.4 per cent thanks to household name brands such as CiF.

Analysts do not seem too worried about the slightly disappointing results – Unilever has a history of delivering strong shareholder returns and its dividend is still covered by earnings and cash flows. In an era of huge consumer choice and a shift towards online delivery, there is no doubt that the brand has been operating in a tough climate but some have expressed concern that the company has not taken steps to negate these challenges as well as its competitors have. Analysts at RBC said that Unilever needs to consider increasing investment, going on to say that: “this is about Unilever and management’s adherence to a business model that isn’t working.”

Others have also criticised Chief Executive Alan Jope’s insistence of maintaining his predecessor’s target of reaching 20 per cent margins by 2020 instead of pushing for greater growth.

Some analysts, though, have pointed out that Unilever is a victim of the current era – where previously investors would have been impressed by the brand’s defensiveness of its products, now a lack of conviction about the company’s green credentials could be holding it back.

The general consensus however is that Unilever’s diversity of products and global market share should help fuel a bounce back although only time will tell if it can keep pace with its competitors.

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.


Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance.

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