Unilever’s (NYSE:UL) earnings report for 2024, released Thursday, offered a mixed performance, meeting overall expectations but failing to provide much excitement for investors. The consumer goods giant posted full-year sales of €60.8 billion, slightly surpassing analyst forecasts. However, the company’s outlook for 2025 has left investors cautious, sending its shares down by more than 5%.
Sales and Profits Meet Expectations, but Growth Slows
For the year 2024, Unilever saw organic sales growth of 4.2%, just shy of the 4.3% consensus. While price increases moderated and volume growth remained stable, the results reflect the ongoing pressures in the market. The company’s operating profit of €11.2 billion was a modest increase, in line with projections, and its operating margin improved by 15 basis points, which was also in line with expectations.
Earnings per share rose by 2.1% year-over-year to €2.98, indicating stable profitability despite macroeconomic challenges. While the results were solid, they lacked the strong growth catalysts that investors were hoping for.
Cautious 2025 Outlook and Investor Sentiment
Unilever’s cautious outlook for 2025 added to the negative sentiment. The company expects organic sales growth to be within a 3-5% range for the mid-term, but analysts warn that the early months of the year may see weaker momentum. RBC Capital Markets analysts noted, “The outlook stresses the expected slow start to 2025. While it aligns with consensus, we would not be surprised to see Q1/Q2 consensus expectations come down.”
The company is also moving forward with the demerger of its ice cream business, which will be listed on the Amsterdam, London, and New York stock exchanges. Jean-Francois van Boxmeer, former CEO of Heineken, will take the lead of the newly independent unit.
Restructuring and Buyback Announcement Fail to Ease Concerns
Despite announcing a €1.5 billion share buyback program, set to be completed before the ice cream business spin-off, Unilever’s shares dropped more than 5%. Investor concerns over the company’s lack of stronger growth drivers and the uncertainty surrounding its restructuring efforts weighed heavily on sentiment.
The spin-off of the ice cream business is part of Unilever’s broader strategy, but investors appear to be seeking more decisive improvements in volume growth and overall category performance. Although Unilever has made progress in cost control and brand investments, the market remains focused on whether these efforts can lead to more substantial growth.
Pressure to Accelerate Growth
Unilever continues to face pressure to accelerate growth and improve operational efficiency. The company has managed to stabilize margins through disciplined cost control and brand investments, but analysts believe it will need to show more significant improvements in volume growth to win back investor confidence. The outlook for the coming year reflects the challenges facing Unilever as it attempts to regain momentum in a competitive market.
As it stands, Unilever’s outlook for 2025, coupled with its recent performance, has left investors uncertain about the company’s near-term prospects, fueling concerns about the future trajectory of the stock.
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