Unilever Shares (ULVR.L) Hit 52 Wk Highs, Up Big On Impressive H1 Report

Unilever shares (LON: ULVR) experienced a significant surge following the announcement of a strong financial performance in the first half of 2024. The results have surpassed market expectations, showcasing the company’s resilience in navigating a challenging global market, with the stock price now trading 6.85% up on the day.

The increase in price action has seen the stock hit new 52 wk highs, with 4710p representing the highest ULVR price for some 4 years.

The consumer goods titan reported an underlying sales growth of 4.1%, which was attributed to an increase in volumes and an effective pricing strategy. This growth indicates Unilever's ability to adapt to the evolving market dynamics and consumer demands. Their successful maneuvers underscore the underlying strength of the business and its potential to maintain momentum in the foreseeable future.

A noteworthy development in Unilever’s report was the exceptional performance of its “Power Brands”. These brands, which account for approximately 75% of the company’s turnover, witnessed a 5.7% rise in underlying sales. This figure is crucial as it serves as an indicator of the health and competitive positioning of the company’s core products.

Further bolstering investor confidence was the reported 420 basis point increase in Unilever’s gross margin, bringing it to 45.7%. This improvement is a direct reflection of the company's operational efficiencies, such as volume leverage, product mix optimisation, and productivity gains. These strategic initiatives have translated into a more profitable operation, which can sustain further growth and development within the business.

In an especially positive move for shareholder interests, Unilever has upgraded its full-year earnings before interest and taxes (EBIT) margin guidance to “at least 18%” and anticipates an EBIT increase of at least 5% compared to the current consensus. These targets are underpinned by the company's intensified investments in brand marketing—a sign that Unilever is committed to fuelling its growth engine through proactive brand development and visibility.

Despite strides in volume improvement in the second quarter, Unilever acknowledged that its turnover-weighted market share has remained relatively steady. This admission points to the ongoing competitive pressures within the industry, a factor that continues to challenge the company. Nevertheless, Unilever seems poised to hold its ground and forge ahead despite these competitive tides.

In a solid demonstration of its operational fortitude, Unilever reported robust free cash flow generation at €2.2 billion. Moreover, reflecting the company’s commitment to delivering shareholder value, Unilever announced a 3% dividend increase along with share buybacks. These moves are a strong indication of the company’s financial health and its confidence in future growth prospects.

Unilever has presented a compelling narrative of growth, strategic investment, and shareholder value in its first half of 2024. Investors and market watchers alike will be keeping a close eye on how the company builds upon these positive results in an ever-evolving consumer goods landscape.