And that's the highest margins division |
Financial Times: Demand for Unilever’s high-end cosmetic brands has surged despite the cost of living crisis, in contrast to its mass market food, soap and detergent sales. |
JPMorgan raises Unilever to 'overweight' (underweight) - price target 5,100 (3,600) pence |
BIG NEWS: Greencore Group (UK, 0386410) will be added to the FTSE 250 Index and deleted from the FTSE SmallCap Index. All changes are effective from 16 May 2024. Full details of index changes available on the FTSE Russell website. |
Telegraph , 'Questor' share tip , 'buy'
Questor: Play the long game by investing in this consumer goods supplier |
 Proactive Investors
- Unilever (LON:ULVR) is the most compelling turnaround story in European staples, according to analysts at Barclays (LON:BARC), who have tweaked their price target up to £52 (£50 previously).
After two consecutive strong volume quarters this year’s second quarter could see a sizeable margin beat.
“We raise our topline, margin, and EPS estimates. Unilever is becoming a higher-growth, higher-margin business.”
New management remuneration KPIs are more aligned with shareholder interests said Barclays, which is especially happy with the new 30% weighting of TSR [total shareholder return] in management LTIP [share incentive plan].
“Unilever has used a more demanding peer group and on the TSR element will get a zero payout if it is below the 50th percentile over three years.
“This to us suggests management is very confident in delivering stepped-up EPS growth.
“Unilever is doubling down on 'hard currency' EBIT and EPS growth and no longer willing to hide behind 'constant' currency which has put off many investors in the past.”
Overweight is the investment rating. |
The strong performance by Reckitt (RKT) and Unilever (ULVR) in the first quarter proved a relief to investors, with their share prices subsequently gaining 6 per cent and 7 per cent, respectively. Only a few months ago, both companies were struggling to sustain volumes and margins against a relentlessly tough macro backdrop.Whether these trading updates indicate an imminent recovery or a temporary reprieve depends on who you ask.In Unilever's case, brokers remain divided over longer-term growth prospects. Berenberg is firmly in the bullish camp, with its analysts stating that the company's recent performance supports a re-rating of the stock. "We are pleased to see the group deliver volume growth that is meaningfully higher than that achieved by industry bellwethers," they said.The investment bank named Procter & Gamble (US:PG) and Nestlé (CH:NESN) as the most relevant comparators. The former managed no volume growth across the three months to the end of March, while the latter saw "real internal growth" its preferred measure fall by 2 per cent. Meanwhile, Unilever reported underlying volume expansion of 2.2 per cent up from 1.8 per cent in the final quarter of FY2023. It also achieved consensus-beating revenue growth in all three of the regions in which it operates.Unilever is still in the implementation phase of its growth action plan, which should give glass-half-full types confidence in further upgrades. Chief executive Hein Schumacher introduced the scheme centred around boosting the company's power brands last autumn. Although broker UBS acknowledged that it appears to be yielding some early benefits, it maintains a sell rating on the company."Our view remains that above and beyond a relatively average execution, the main reason behind Unilever's below peers' operational performance in recent years resides in a portfolio skewed towards lower growth [and] lower gross margin categories," the bank's analysts said. They highlighted skin cleansing and fabric care as areas of particular concern given their price elasticity.For its part, management has done little to boost investor expectations. It maintained guidance of 3-5 per cent organic sales growth for 2024, with a "modest improvement" to operating margins. The forthcoming demerger of Unilever's ice cream business may also provide a modest boost to profitability once completed. UBS estimated the underperforming division shaved 90 basis points off the company's operating margin last year.Some brokers are hoping that other consumer goods groups embrace the logic of spin-offs. "We don't see what synergies there are from selling baby food and surface cleaner within the same business," Bernstein's analysts said following Reckitt's Q1 update. "At the current valuation we think that management should be looking more seriously at a radical change in their corporate strategy."Like Unilever, Reckitt delivered consensus-beating sales growth across the three months to the end of March. This was driven by gains in its hygiene division, which helped to offset continued declines in its troubled nutrition business. Haleon (HLN) is something of an outlier in the consumer goods cohort in that it's purely a healthcare group. Consumers tend not to trade down for cheaper medicines when inflation bites giving the company a defensive edge over peers with, say, food production divisions.In its first-quarter update, Haleon's management continued to guide for organic revenue growth of 4-6 per cent this year, putting it ahead of most of its peers. However, its top-line figures in the first quarter were down 2.2 per cent to £2.92bn, slightly lower than broker consensus of £2.93bn, due to a strong prior-year comparative and currency headwinds. Operating profit was ahead of expectations, growing by 4.5 per cent to £455mn on the back of higher gross margin and cost efficiencies.Its shares fell by 3 per cent, although this may have more to do with fears around a forthcoming share sale by Pfizer (US:PFE) than any qualms over performance. Haleon began its life as a joint venture between the US pharma giant and GSK (GSK) before being spun off by the latter in 2022. Pfizer still owns some 23 per cent of Haleon's stock, however, and intends to keep selling this down potentially constraining share price growth as it does.Ultimately, there are reasons to be cautious around the UK's blue-chip consumer groups, even if their top lines or growth prospects look healthy. A rebound in demand in some segments won't solve issues with corporate structures in the long run. While Haleon is still dealing with the consequences of its own demerger, its peers have to figure out if (and how) to structure spin-offs in their ranks. |
Recent press comment on Unilever (ULVR) has centred on the practical difficulties associated with the group's decision to hive off its ice cream businesses. The relentless pursuit of social justice causes by the Ben & Jerry's brand obviously informed that decision, but the group cited a "different channel landscape, more seasonality, and greater capital intensity" as contributory factors.The separation of the business from the rest of Unilever, which forms part of its "Growth Action Plan" to optimise the business structure, will complete by the end of 2025. A demerger seems the most likely option, although management hasn't ruled out an outright sale. The relative pros and cons of the split in relation to the group's cost base will partly determine the extent to which management will be able to maximise returns for shareholders.For now, however, the owners of the fast-moving consumer goods group can take some heart from a Q1 update that detailed volume growth across all five business units, including ice cream. Underlying sales growth came in ahead of company-compiled consensus at 4.4 per cent, with turnover up by 1.4 per cent to 15.0bn (£12.8bn). The improvement was particularly noticeable at the beauty and wellbeing segment.Arguably, the potential growth characteristics of the product portfolio are reflected in underlying sales growth of 5.4 per cent in emerging markets, with volumes on the rise in the Latin American, Turkish and African markets a pointer to positive demographic trends. However, the group did highlight negative pricing developments in India and Indonesia. In the case of the latter locale, the problems stem from Indonesian consumers "avoiding multinational brands in response to the geopolitical situation in the Middle East". Whatever the geographical trend, the group's determination to streamline its product portfolio seems justified given that the sales growth of its "power brands" easily outstripped the group average. These brands now account for 75 per cent of turnover, but it's likely that this proportion will increase over time in line with optimisation measures. |
Cha-cha-cha that's not a news, it happened ages ago |
https://www.telegraph.co.uk/business/2024/05/02/gordon-brown-decision-to-sell-britain-gold-disastrous/ |
I think Barclays raised to 50 a few days go |
DZ Bank raises fair value for Unilever to 4,500 (4,300) pence - 'hold' |
RBC RAISES ULVR PRICE TARGET TO 4400 (4300) PENCE |
Nice market reaction today. 👍 |
#GaryCook, I hold those 3.. :o), but try to achieve a portfolio average of 5% income, holding just the high yield stocks can often bite back IF they get halved (DEC/VOD), or cancelled completely (DLG), it is of course the FY average that matters most YoY..
ULVR should (hopefully) make a 5% CG this year on top of the dividend, buying at 3750 last week now looks a gift..! |
Yep, Should have increased the Dividend with a 4.4% Q1 profit. I would buy ULVR if they increased the Dividend. A 3.7% yield is poor. When you can get 10% on BATS, and 8.2% on IMB ! |
Not bad figures generally but as an income investor it's disappointing that the quarterly divi, €¢42.68 for Q1 of 2024, has remained unchanged since Q4 of 2020. |
Quietly positive TS ; no use of the words "headwinds" or "pressures" ; I like that. |
https://www.marketscreener.com/quote/stock/UNILEVER-PLC-9590186/news/Unilever-beats-quarterly-sales-growth-expectations-46524565/ |
Money moved to GNC [greencore] ready made food manufacturer for MKS & other high street retailers |
Switched to GNC |
Bloomberg covered the same story last week. |
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