British personal care, cosmetics and food giant Unilever reported flat third-quarter sales year-on-year on Thursday, October 24, despite rising volumes, as price increases continued to slow during the period.

“We have delivered a fourth consecutive quarter of positive, improved volume growth,” said Unilever CEO, Hein Schumacher. While underlying sales grew 4.5%, “price growth continued to moderate in line with our expectations,” he added.

Unilever markets a large array of consumer products, including toiletries and personal care products such as Dove, Axe and Rexona, Vaseline and Pepsodent, skincare products such as Paula’s Choice, and food – (Knorr soups, Ben & Jerry’s) and household products.

The group reported a turnover of 15.2 billion euros for the third quarter. In detail, the sales fell in the Personal Care, Home Care and Nutrition divisions, but increased for Beauty & Well-Being (+5.1%) and in Ice Cream (+8.1%). Later this year, Unilever nevertheless announced it would divest from the latter, which includes brands such as Ben&jerry’s, Cornetto and Magnum.

Activist fund

Under pressure to improve performance, particularly from activist investor and American billionaire Nelson Peltz, who has been on the board since 2022, Hein Schumacher unveiled a new strategic plan a year ago. He intends to boost the group’s performance by focusing on 30 "Power Brands", which together represent 70% of the company’s revenue. Furthermore, Unilever announced in March that it would separate its ice cream division and launch a cost-cutting plan to boost its margins, providing for 7,500 job cuts, or nearly 6% of the workforce.

“We are still in the early stages of transforming our performance as we execute the Growth Action Plan at pace,” commented Mr Schumacher. The plan is focused on “doing fewer things, better and with greater impact,” and the CEO deemed it has started to give “positive impact.”

Inflation slows down

Things are definitely improving for the consumer goods giant, according to AJ Bell investment director Russ Mould. “This performance has been built on improved product innovation,” he said.

However, as the economic context is changing Unilever is slowing down price increases. “This helps explain why the company expects margin progression to slow overall in the second half of the year,” Russ Mould added.

Unilever, which only publishes its results twice a year, had recorded a slight increase in net profit in the first half. It was already driven by an increase in sales volumes which boosted its margins in a context of slowing price increases.

At the beginning of the month, Unilever also announced the sale of its assets in Russia to the Arnest group, the largest Russian cosmetics manufacturer. The retention of these assets since the start of the conflict in Ukraine was criticized by the Ukrainian government and NGOs.