Unilever Earnings: Volumes Ahead Despite Solid Pricing, but Market Share Lags

Unilever reported solid sales growth in the first half at 9.1%, ahead of company-compiled consensus of 8.3%, with volumes and pricing driving the beat (volumes down 0.2% versus down 0.7% for consensus, pricing up 9.4% versus up 9% for consensus). Management upgraded fiscal 2023 organic growth guidance to higher than 5% versus the upper end of its 3%-5% medium-term range previously, 6.1% for consensus (prerelease), and 6.7% in our updated model. The underlying operating margin was higher at 17.1% versus consensus' 16.2%, with Unilever continuing to expect a modest improvement for the full year (up 37 basis points in our model). Net material inflation for 2023 is about EUR 2 billion, of which EUR 0.4 billion is expected in the second half, implying a significantly lower need for price rises in the second half (up about 3.5% in our model).