Unilever (ULVR) £47.05

Gain to date: 23%

Shares flagged the attractions of consumer goods goliath Unilever (ULVR) at £38.19 in January 2024 on the grounds the Dove-to-Domestos maker’s intrinsic strengths were underappreciated by the market.

We also hoped new chief executive Hein Schumacher could reinvigorate growth and revitalise the FTSE 100 firm’s share price.

On 15 February, we urged readers to stick with Unilever following full year results (8 February) which revealed a welcome return to volume growth in the year to December 2023.

WHAT HAS HAPPENED TO SINCE WE SAID TO BUY?

Unilever’s shares are 23% up on our entry price, with the planned sale of its struggling ice cream division and a big cost-cutting drive helping to revitalise the stock price following a period of sluggish growth and activist pressure.

First half results (25 July) provided the latest stock price boost, despite second quarter organic sales growth coming in light of expectations. The market welcomed a third consecutive quarter of improving volume growth in Q2 as well as a massive upgrade to the full-year underlying operating margin to ‘at least 18%’ with productivity gains filtering through.

Power Brands, which speak for roughly three quarters of group revenue, spearheaded the first-half growth with a 5.7% sales advance and volumes up a healthy 4%, suggesting investment behind these products is paying off and consumer demand for big brands is bouncing back.

WHAT SHOULD INVESTORS DO NOW?

This is no time to take profits, with Schumacher putting the company back on a path for growth.

Unilever offers investors a play on emerging markets growth and continues to reward shareholders with progressive dividends and earnings enhancing share buybacks.

Efforts to sell or float the ice cream division, which will enable Unilever to focus on other divisions with stronger growth prospects, are ongoing and investors will want to be on the shareholder register if there is a demerger, since this will give them exposure to storied brands such as Magnum, Cornetto and Ben & Jerry’s in a dedicated, focused, standalone ice cream business. 

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