Unilever holds guidance after Q1 sales beat; Sees 'limited' tariffs hit

(Sharecast News) - Unilever said it expected a "modest" improvement in full-year underlying operating margin and reaffirmed its annual outlook after better-than-expected first quarter sales growth driven by price hikes, adding that the impact of US tariffs would be "limited and manageable". The maker of Ben & Jerry's ice-cream - which is to be spun off - on Thursday reported underlying sales growth of 3% for the first quarter, beating expectations of 2.8%. Margins in the first and second half were expected to be "more balanced" than last year.

It also revealed that around 6,000 jobs had been axed so far as part of a restructure which would see a total of 7,500 posts go worldwide in a bid to save €800m of which €550m would be achieved in 2025.

"We are conscious that the macroeconomic environment, currency stability and consumer sentiment remain uncertain and we will be agile in adjusting our plans as necessary," Unilever said in a trading statement.

"We expect underlying sales growth to be within our range of 3% to 5%. This is underpinned by our strong innovation pipeline, good momentum in developed markets, and expected improvements in Indonesia and China in the second half of the year resulting from the decisive actions we have taken in both markets."

The firm said it was going ahead with the separation and listing of its Ben & Jerry's and Magnum ice-cream division, to be called The Magnum Ice Cream Company, in the final three months of this year 2025, while it will operate as a standalone business from July 1 with a main listing in Amsterdam and secondaries in London and New York.

"Unilever has dodged the bullets which harmed Reckitt Benckiser following its update yesterday, with a rather more solid outlook which gives investors additional clarity," said Interactive Investor head of markets Richard Hunter.

"Similar themes are at play to the ones reported by Reckitts, but the direction of travel is rather different. On the one hand, there is inevitably some concern that the chances of an increasingly cost-conscious consumer switching to the cheaper, own-brand products of rivals, alongside a large decline in volumes, remains on the radar."

"However, in stark contrast to Reckitts, Unilever's own disposal is fully on track and the "Magnum Ice Cream Company" will be demerged in the final quarter of this year."

"For many, Unilever will continue to be seen as a solid defensive play and a core constituent of most portfolios. Its characteristics have come into their own amid an uncertain global economic environment, leading to a share price rise of 25% over the last year, as compared to a hike of 4.5% for the wider FTSE100."

Reporting by Frank Prenesti for Sharecast.com