What’s happening with the Unilever share price?

After months of falling sales volumes, the Unilever share price is now rising as it starts getting things back on track. Time to consider buying?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Unilever plc

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The Unilever (LSE:ULVR) share price jumped today (8 February) as its full-year results didn’t disappoint. The stock’s been on a downward trajectory throughout most of 2023 as demand for premium products suffered in light of inflation.

With families opting for cheaper alternatives, sales volumes have been slowly shrinking. Or at least, they were until now.

Volumes are finally rising again

During the first three quarters of 2023, overall sales volumes fell by 0.2%, 0.2%, and 0.6% in sequence. Management was able to offset this impact through price hikes, enabling overall underlying sales growth to continue moving in the right direction.

Successfully exercising its pricing power is obviously an encouraging sign. After all, it’s a strong signal that consumers are happy to pay a premium for Unilever’s brands with a reputation for quality, even during a cost-of-living crisis.

However, even the most popular brands in the world have a limit on how much they can charge. That’s why it’s critical to pursue good volume performance as well.

Fortunately, it seems management has done just that. In an encouraging turn of events, sales volumes in the fourth quarter jumped 1.8%, elevating the full-year level into positive territory, albeit by just 0.2%. As such, total underlying sales growth landed 7% ahead of management’s 5% target, providing a pleasant surprise for investors.

In terms of reported results, total turnover did shrink 0.8% to €59.6bn (£50.9bn). However, this slide ultimately stemmed from unfavourable foreign exchange rates rather than a fundamental problem with its products.

A closer look at divisions

Across all its segments, Beauty & Wellbeing appears to be leading the charge, helping drive up full-year figures ahead of expectations.

Q4 Underlying Sales GrowthQ4 Underlying Volume GrowthFull-Year Underlying Sales GrowthFull-Year Underlying Volume Growth
Beauty & Wellbeing7.9%6.3%8.3%4.4%
Personal Care6.4%2.5%8.9%3.2%
Home Care1.7%0.8%5.9%-0.9%
Nutrition4.7%-1.1%7.7%-2.2%
Ice Cream-0.4%-0.8%2.3%-6.0%

However, as encouraging as these results are, they’re not without blemishes. Across all its segments, Unilever is having to tackle increasing levels of competition from private-label manufactures, especially in Europe and the United States.

As a consequence, the firm’s market share is actually shrinking. Despite setting a goal of 50%, control in the second quarter of 2023 stood at 41% before shrinking to 38% in Q3 and now 37% in Q4.

Needless to say, that’s not the sort of trend investors want to see. Management has said it’s moving quickly to address this growing problem. Yet the details regarding its plan to recapture market share are so far few and far between.

The bottom line

Overall, these latest results came with a sigh of relief for many investors as Unilever and its share price appear to be getting back on track. Pairing this with a relatively cheap price-to-earnings multiple of 14 suggests the stock could be a buying opportunity for investors seeking to diversify their portfolio into the consumer products space, I feel.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Unilever Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

With a P/E ratio of 9, is the Aviva share price a bargain?

Christopher Ruane looks at the Aviva share price and considers some strengths and weaknesses of the FTSE 100 insurance business.

Read more »

Surprised Black girl holding teddy bear toy on Christmas
US Stock

Is it too late to buy growth stock Shopify after its 25% pop?

Up more than 40% this year, Shopify is on fire at the moment. Here, Edward Sheldon explains how he’d play…

Read more »

Investing Articles

Investors should consider buying this energy AIM stock, up 50% in the past year

AIM stock Afentra has seen a stellar price rise in 12 months to November. I believe there may be room…

Read more »

Investing Articles

2 ISA shares to consider for a large passive income!

Looking for dividend shares to buy in a Stocks and Shares ISA or Lifetime ISA? Royston Wild reveals two of…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

A Bitcoin investment that can be held inside a Stocks and Shares ISA or SIPP

UK investors can’t buy Bitcoin ETFs for their investment accounts or SIPPs due to FCA regulation. This stock could be…

Read more »

Entrepreneur on the phone.
Investing Articles

As the Vodafone share price slides 6% on lacklustre H1 results, what does the future hold?

After posting moderate results this morning, Vodafone saw its share price sink further, erasing this year's gains. Our writer looks…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing For Beginners

If I’d invested £5k in a FTSE tracker fund after the pandemic crash, here’s what I’d have now

Jon Smith explains the extent of his potential gains if he'd invested in a FTSE tracker fund during the Covid…

Read more »

Investing Articles

2 top shares I’ve bought for my Stocks and Shares ISA in November

This writer reveals a pair of fast-growing businesses that he's recently added to his Stocks and Shares ISA for the…

Read more »