Unilever is confident sales volumes from its nutrition business will grow again in the second quarter as the negative effects of portfolio cuts in its Europe market start to ease.
Speaking to analysts after Unilever reported its first-quarter results today (25 April), CEO Hein Schumacher said the group “expects improvement in that segment from quarter two onwards”, with its “conscious de-listings” now behind them.
Volumes from Unilever’s nutrition division, which includes brands such as Marmite spread and Colman’s mustard, fell 0.4% in the first quarter of 2024.
While the latest dip is an improvement on the 1.1% drop in the final three months of 2023, negative volumes were still seen in its European market, driven by cuts to SKUs last year.
Unilever managed to grow its prices in Europe at a mid-single-digit rate but that was “fully offset” by the lower volumes, the group reported.
Underlying sales for its nutrition unit grew 3.7% in the first quarter. Divisional turnover for the period was flat on the previous quarter at €3.4bn ($3.65bn).
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By GlobalData
Unilever’s dressings business saw mid-single-digit growth, led by Hellmann’s mayonnaise.
The company’s “scratch cooking” range, which includes Knorr bouillons, stock cubes and savoury seasonings, recorded “mid-single-digit” growth, accelerated by the launch of ready-to-heat rice cups earlier this month.
The Pot Noodle owner’s Latin America, North Asia and Africa markets booked double-digit sales growth.
When asked by one analyst whether the group was starting to see the gains private-label has recently made level off, Schumacher said: “I think it’s fair to say that from what I see in our categories, yes, it’s plateauing”. He added Unilever felt a need to boost its “promotional intensity” in the first quarter “because we really felt that we had to draw a line on the volumes there”.
Unilever’s ice cream unit saw its underlying sales grow 2.3% but volumes declined 0.9%. Annual turnover was up 50% on the previous quarter, at €1.8bn.
In-home ice cream sales growth was flat on the previous quarter, while out-of-home sales were up at a mid-single-digit rate.
In March, the Magnum and Ben & Jerry’s owner announced plans to demerge the ice-cream division from the rest of the business.
At the time, the group said a demerger of the unit’s assets into a listed company was “the most likely separation route”. CFO, Fernando Fernandez, confirmed today that this was still the case.
Commenting on the potential cost impact of the move, Fernandez said there would be “an element of tax leakage” but stressed Unilever’s ongoing “productivity programme” – a business shake-up expected to affect up to 7,500 employees – would help the company save around €800m.
He added: “That should more than fully offset the synergies and the potential leakage that we have when we separate ice cream.”
