Unilever lifts volume outlook as emerging markets drive Q3 beat

Unilever Raises 2023 Volume Outlook as Emerging Markets Boost Q3 Sales

Unilever's Q3 Performance and Market Dynamics

Oct 28 (Reuters) - Unilever nudged up its annual volume growth forecast on Wednesday after third-quarter underlying sales beat expectations, driven by strong demand in emerging markets and price increases that helped offset higher commodity costs.

Portfolio Simplification and Pricing Strategy

The consumer goods group, which has been simplifying its portfolio under CEO Fernando Fernandez to focus on beauty and personal care brands, has raised prices for home and personal care products to counter higher energy and transport costs linked to the Iran war.

Industry-Wide Price Hikes

Major consumer goods and food companies, including Coca-Cola, Procter & Gamble, Nestle and Reckitt, have warned of further price hikes next year to offset rising energy, raw material and freight costs tied to the conflict, even as shoppers remain cautious about spending.

Sales Growth and Financial Guidance

Unilever reported underlying sales growth of 5.2% for the quarter, ahead of the 4.8% expected by analysts in a company-compiled consensus.

2026 Outlook and Volume Growth

The maker of Dove soap and Hellmann's mayonnaise maintained its 2026 sales and profit margin guidance and said it expects underlying sales growth of around 5% in the second half of 2026.

Updated Full-Year Guidance

It now expects full-year underlying volume growth of at least 3%, up from previous guidance of around 3%, after posting volume growth of 2.9% in the third quarter and price growth of 2.3%.

Emerging Market Growth Led by India

EMERGING MARKET GROWTH LED BY INDIA

"Emerging markets were again a key driver, with broad-based growth across markets, led by India and continued strength in Latin America and Southeast Asia," Fernandez, who was appointed last year, said in a statement.

Developed Markets and Sector Comparisons

Performance in developed markets was weaker, reflecting tougher comparisons with a year earlier and softer results in the Foods business, he said.

Competitor Performance

Unilever joined a growing list of consumer goods companies that beat quarterly sales expectations on stronger-than-expected volume growth.

Procter & Gamble and Nestle Results

Procter & Gamble and Swiss food group Nestle last week both reported quarterly sales ahead of estimates, helped by higher volumes. French cosmetics group L'Oreal also reported sales that comfortably exceeded expectations.

Profit Margin Concerns

Procter & Gamble, however, warned that rising raw material, energy and freight costs would weigh on annual profit.

(Reporting by Yadarisa Shabong in Bengaluru. Editing by Harikrishnan Nair and Mark Potter)