This week I will be turning my attention to Unilever, the global consumer goods company, which announced full year results to 31 December 2019. It marks the first year of new CEO, Alan Jope who took over the helm on 1 January 2019.
Results were somewhat muted with underlying sales growth of 2.9% slightly missing their target range of 3 to 5%. The company cited a “significant slowdown” in South Asia and “market softening” in China justifying their miss, possibly hinting to the continued impact of the US-China trade war. Unilever has been pushing emerging markets as its source of further growth however shareholders will be hopeful that this is a short term hiccup with further benefits to come.
The company has initiated a strategic review of its tea business, featuring brands such as Lipton and PG Tips, in a bid to tilt their portfolio to higher potential growth areas. Two thirds of Unilever’s tea brands focus on black tea which Jope suggested has fallen out of fashion, with younger shoppers more likely to favour premium infusions.
Jope has had big shoes to fill from previous CEO Paul Pollman, the latter headed up Unilever for almost a decade with a strong track record. Pollman’s highlights include a share price return over 150%, fending off a takeover bid from Kraft Heinz and his sustainability initiatives at the firm. Jope indicated that he will continue Unilever’s efforts focussing on “brands with purpose” emphasising his sustainability goals.
Unilever also hinted at continued innovation in plant-based foods and to further increase brand awareness, to drive future growth. Shareholders will be keen to see the progress on rotating the portfolio into higher potential ventures whilst not losing focus on the current brands.