Unilever slows price hikes after loss of market share in Europe and North America

By Louis Goss

Unilever shares increased on Thursday after the consumer goods giant vowed to buy back another EUR1.5 billion worth of its own shares from shareholders, despite posting what company CEO Hein Schumacher described as "disappointing" results for the fourth quarter of 2023.

The London headquartered company, which owns top consumer brands including Dove soap and Hellmann's mayonnaise, saw its revenue drop 3% in the fourth-quarter, to EUR14.2 billion, as it lost out on market share in both Europe and North America.

The FTSE-100 company, meanwhile, slowed down its price hikes, particularly in its ice cream and home care divisions, as it aimed to draw back hard hit customers in Europe who have now started buying cheaper alternatives to Unilever's products.

Shares in Unilever (UK:ULVR) increased 3% on Thursday having lost 2% of their value over the previous 12 months.

Commenting on the results, Unilever CEO Schumacher, who took up his position in January 2023, vowed to push ahead with plans to turnaround the firm, as he said the company's "competitiveness remains disappointing" and argued its "overall performance needs to improve."

Unilever's turnaround plan, which was announced last October, is set to see the FTSE-100 company boost investment into marketing its top 30 "power brands," which currently account for 75% of firm-wide revenues.

Richard Hunter, head of markets at interactive investor, however, warned that Unilever's turnaround is likely to be slow, as he argued "the famous investment adage of 'elephants don't gallop' fully applies to Unilever."

Unilever reported higher revenues year-on-year across all segments of its business - apart from home care and nutrition divisions which include cleaning products such as Cif, Comfort and Domestos, and food brands including Horlicks, Knorr, and Hellmann's.

The Ben & Jerry's ice cream owner said its market share was hit by customers shifting towards own-brand goods in Europe and towards super premium products in North America.

AJ Bell analysts led by Russ Mould explained that high levels of inflation have seen Unilever pass higher costs onto customers, in a shift that has seen some customers opt for "cheaper supermarket own-brand products such as with ice cream."

"Trading down will remain a competitive threat for Unilever until interest rates start to fall and consumers feel more confident about their finances," the AJ Bell analysts said.

Unilever's price hikes slowed to rates of 2.8% in the fourth quarter of 2023, compared to the 13.3% increases it implemented in the same period in 2022. The company has seen its price increases slow incrementally over the previous year.

-Louis Goss

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02-08-24 0626ET

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