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Second Quarter Results Below Expectations
Unilever’s sales fell short of expectations in the second quarter of the year, as a turnaround plan from CEO Hein Schumacher struggled to gain traction with consumers. Despite missing sales targets, the company’s shares surged by as much as 5.5% in early trading, reaching the top of the FTSE 100 index.
The company reported a 3.9% increase in revenues for the quarter, falling short of the anticipated 4.2% growth. This underperformance suggests that Schumacher’s growth strategy is facing challenges amid ongoing economic pressures, including the cost of living crisis and changing consumer spending habits.
Turnaround Plan and Strategic Changes
Unilever has been implementing a significant turnaround plan, which includes spinning off its ice cream division, including brands like Ben & Jerry’s, and cutting around 7,500 jobs. Schumacher emphasized the importance of focusing on fewer activities with greater impact.
“The Growth Action Plan, including our productivity program and the separation of Ice Cream, is progressing,” Schumacher stated. “We are committed to transforming Unilever into a consistently higher-performing business, though there is still much work to be done.”
Financial Performance and Future Outlook
For the first half of the year, Unilever reported net profits of €4 billion, with total revenues rising by 4.1% to €16.1 billion. The company maintains its expectation for underlying sales growth in 2024 to remain within its long-term target range of 3% to 5%.
The separation of the ice cream business is on track and expected to be completed by the end of 2025. Unilever is currently working to establish a separate legal entity and finalize the financial carve-out.
Market Reaction and Share Performance
Schumacher’s turnaround efforts have been positively received by the market in recent months, with Unilever’s shares up approximately 18.32% overall. This rise reflects investor confidence in the company’s strategic direction despite the current sales miss.
