Unilever Net Profit Falls as Sales Missed Expectations, Launches Share Buyback — Update

By Michael Susin

Unilever reported a better-than-feared net profit drop for 2023, following a turnover drop in the fourth quarter, and launched a share buyback.

The Anglo-Dutch retailer--which owns consumer brands such as Ben & Jerry's ice cream and Dove soap--on Thursday posted a net profit of 6.49 billion euros ($6.99 billion) for the year compared with EUR7.64 billion for 2022 and a consensus of EUR6.23 billion, taken from FactSet and based on 11 analysts' estimates.

Turnover fell to EUR59.6 billion from EUR60.07 billion for the prior year, mainly driven by currency headwinds and net disposals. It was expected to fall to EUR60.04 billion, according to the company-compiled consensus. For the fourth quarter, turnover fell 3% to EUR14.2 billion compared to a consensus of EUR14.28 billion.

Unilever said underlying sales growth accelerated to 7.0%, driven by prices, which rose 6.8%, and volumes, which rose 0.2%. Analysts polled by the company expected sales growth of 7.1% driven only by pricing, while volumes were forecast to remain flat.

Underlying operating profit--one of the company's preferred metrics, which strips out exceptional and other one-off items--was EUR9.9 billion for the full year compared with EUR9.68 billion a year prior and consensus of EUR9.88 billion.

The group launched a EUR1.5 billion share buyback program for 2024, set to start in the second quarter.

The board declared a fourth-quarter dividend of EUR0.4268, flat on the year prior.

"Today's results show an improving financial performance, with the return to volume growth and margins rebuilding. However, our competitiveness remains disappointing and overall performance needs to improve. We are working to address this by improving our execution to unlock Unilever's full potential," Chief Executive Hein Schumacher said.

Looking ahead, Unilever expects underlying sales growth for 2024 to be within the range of 3% to 5%, with more balance between volume and price.

"We anticipate a modest improvement in underlying operating margin for the full year. We will deliver this through gross margin expansion, driven by a step-up in productivity and net material inflation back to more normal levels," Unilever added.

Write to Michael Susin at michael.susin@wsj.com

(END) Dow Jones Newswires

February 08, 2024 02:42 ET (07:42 GMT)

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