Consumer packaged goods powerhouse Unilever (ULVR) topped the FTSE 100 leader board on 25 July after the Marmite-to-Magnum ice cream maker’s second quarter sales beat expectations.

Investors were delighted as the Dove soap-to-TRESemmé maker raised full year sales guidance to ‘above 5%’, ahead of its multi-year range, forecast that underlying price growth will continue to moderate through the year and reported a return to positive emerging markets volume growth.

But closer inspection of the results showed there is much work for new chief executive Hein Schumacher to do with high costs keeping the Sunsilk-to-Vaseline supplier’s gross margins below pre-pandemic levels and Unilever having to fend off hungry competitors.

In Schumacher’s first set of results since taking over from Alan Jope as CEO, Unilever reported a forecast-beating 7.9% rise in second quarter underlying sales which took growth in first half underlying sales to 9.1%.

Prices rose by a significant 9.4% in the six-month period, which did lead to volume declines in both the first and second quarters, demonstrating there are limits to Unilever’s pricing power.

Yet these volume declines were very modest and Unilever’s formidably strong portfolio of brands continues to attract a loyal following, with the company calling out strong showings from ‘billion+ Euro brands’ including Rexona, Hellmann’s, OMO, Sunsilk and Lux.

In a worrying section of the statement, Unilever conceded the percentage of its business winning market share on a rolling 12-month basis has reduced to 41%. That implies almost 60% of its portfolio is maintaining or losing market share to competitors, a trend Schumacher will need to reverse during a cost-of-living crisis which is forcing many hard-pressed consumers to trade down to cheaper own-label brands.

Unilever pinned the blame on a 17% reduction in stock-keeping units as well as pricing dynamics and consumer shifts in certain markets, including the tea and laundry value segments in India and Brazil respectively, and super-premium segments in personal care North America.

‘We continue to focus on the longer-term health and competitiveness of the business while developing the portfolio into high-growth spaces and channels,’ explained Unilever, which recently sold the Suave brand in North America and snapped up the Yasso premium frozen Greek yogurt brand in the US.

Schumacher insisted Unilever’s first half performance highlighted ‘the qualities that attracted me to the business: an unmatched global footprint, a portfolio of great brands and a team of talented people.’

He said the task ahead is to ‘leverage these core strengths – supported by our simplified operating model – to drive improved performance and competitiveness.’

This is Schumacher’s ‘absolute priority’ and will mean bringing ‘greater focus and sharper execution, with science-backed innovations and investment behind our brands.’

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