Unilever plc - ADR

Volume-Led Growth: Unilever reported 4.5% underlying sales growth in Q3, driven by a 3.6% increase in volumes, marking the fourth consecutive quarter of positive volume growth. Growth was particularly robust in the Beauty & Well-being (6.7% growth) and Ice Cream (9.8% growth) segments, indicating a positive response to the company's Growth Action Plan (GAP) focused on enhancing operational efficiency and scaling key innovations.

Challenges in Indonesia: Indonesia faced a significant downturn, with sales declining by 18% in Q3, stemming from long-standing operational issues and price instability. Unilever is implementing drastic measures to rectify this, including resetting distributor systems and stabilizing pricing, with expected improvements only visible by the latter half of 2025. This highlights a key risk area as Indonesia contributes significantly to underperforming sales globally.

Maintained Margin Outlook: Unilever is maintaining its guidance for an underlying operating margin of at least 18% for 2024, despite recognizing challenges from competitive pressures and the return of moderate cost inflation in key commodities. The cautious stance is predicated on sustaining investment behind brands while managing operational resets, indicating careful management in a variable market environment.