Company Report Library

Stocks in Focus: Unilever

This week I am looking at Unilever, the Anglo-Dutch global consumer goods company, following its recent trading update for the first quarter of 2019.

The results were reasonably positive with organic sales rising 3.1%, but came in at the lower end of the company’s multi-year target of 3 to 5% sales growth for the full year. The growth in the first quarter was led by emerging markets, where underlying sales grew 5% with particular improvement in South East Asia.  However, over half of the growth came from price increases, which in turn may cause some concern that the sales volume is not increasing as much as it should be.

The past year has been difficult for Unilever after the former CEO Paul Polman faced criticism for his post-Brexit plans to move the location of the company headquarters from London to Rotterdam. Following a significant shareholder rebellion, Unilever withdrew the proposal and as a result Mr Polman stepped down from his position.  Alan Jope replaced Mr Polman at the start of 2019. Mr Jope has a good track record, and previously ran Unilever’s biggest division, beauty and personal care, which should help to reassure shareholders of his capabilities.

Overall, Unilever shares have continued to perform well in recent years. However, the competitive environment is evolving and the company will have to continue driving innovation to achieve its multi-year sales growth target.  For his part, Mr Jope has assured shareholders that accelerating growth is his top priority. Shareholders will be following Mr Jope’s next moves closely to see whether he can deliver against these expectations.

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