Morning News

Unilever Sales Volumes Return to Growth for the First Time Since 2022

By Mathieu VILLARD
Published on Thu, 02/08/2024 ‑ 23:00

Topic of the day

Unilever reported that its sales volumes grew for the first time in two years, and margins improved as its new turnaround plans advance, placing it among the FSTE 100 blue‑chip index top performers on Thursday. The Anglo‑Dutch retailer—which owns consumer brands such as Ben & Jerry’s ice cream and Dove soap—said 2023 underlying sales growth—which strips out exceptional and other one‑off items—accelerated to 7.0%, supported by positive volumes, up 0.2% for the year and 1.8% in the fourth quarter. Price growth was 6.8%. Analysts polled by the company expected 2023 growth of 7.1% driven only by pricing, while volumes were forecast to remain flat. Shares at 0937 GMT were up 3% at 4,018.5 pence. Over the twelve past months, shares were down 2%. This is the first time Unilever reported volume growth since 2022 as the group increased prices due to high inflation, making consumers seek cheaper options. Underlying price growth decelerated from 10.7% in the first quarter to 2.8% in the fourth quarter, reflecting lower inflation. The company reported a margin improvement of 60 basis points to 16.7%, following its ‘Power Brands’ turnaround plans launched by new Chief Executive Hein Schumacher.

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Swiss stocks

The Switzerland market ended on a weak note on Thursday despite seeing a couple of brief spells in positive territory during the course of the day's trading session. The benchmark SMI, which advanced to 11,257.04 around mid morning, ended with a loss of 71.40 points or 0.64% at 11,138.85, the session's low. Novartis ended lower by 3%. Swiss Re and Zurich Insurance Group ended down 2.2% and 2%, respectively. Roche Holding drifted down 1.45% and Holcim declined 1%. Givaudan, Alcon, Swisscom, Swiss Life Holding and Sika lost 0.5 to 0.82%. Richemont rallied 3.3%. Partners Group climbed nearly 2.5% and Lonza Group gained about 2%. Logitech International and UBS Group advanced 1.2% and 1%, respectively. In the Mid Price Index, Meyer Burger Tech tumbled 5.6%. Helvetia and Flughafen Zurich lost 2% and 1.77%, respectively. Tecan Group gained 3.82%. ams OSRAM AG and Swatch Group advanced 2.9% and 2.75%, respectively. VAT Group, Barry Callebaut, Julius Baer, SGS, Georg Fischer and Lindt & Spruengli ended higher by 1 to 1.6%.

International markets

Europe
European stocks closed on a mixed note on Thursday with investors digesting a slew of earnings updates, and continuing to assess the likely move on global central banks with regard to interest rates. Several ECB officials have warned that central banks need to move carefully on cutting interest rates this year. ECB member Isabel Schnabel said in an interview with the Financial Times that recent data and market bets on quick rate cuts mean the central bank needs to be patient before easing policies. The pan European Stoxx 600 edged down 0.07%. The U.K.'s FTSE 100 drifted down 0.44%. Germany's DAX and France's CAC 40 climbed 0.25% and 0.71%, respectively. Switzerland's SMI ended down 0.64%. Among other markets in Europe, Austria, Denmark, Finland, Iceland, Norway, Poland, Portugal and Russia ended weak. Belgium, Greece, Netherlands, Spain and Turkiye closed higher, while Sweden ended flat. In the UK market, DS Smith soared more than 10%. British American Tobacco surged about 7.5% after an announcement that it plans to sell some of its stake in India's cigarette‑to‑hotels conglomerate ITC. Smurfit Kappa Group gained 6%. Unilever climbed higher after launching a 1.5‑billion‑euro ($1.6 billion) share buyback. Compass Group, Diploma, Admiral Group, 3i, Halma, Entain and Beazley advanced 1.5 to 3.2%. Flutter Entertainment, Kingfisher, Experial, Spirax‑Sarco Engineering and Ocado Group also ended notably higher. AstraZeneca tanked about 7% after reporting lower‑than‑expected profit. SSE ended down 4.7%. Mondi, Antofagasta, JD Sports Fashion, Barratt Developments, Standard Chartered, Taylor Wimpey, Coca‑Cola, National Grid, Marks & Spencer and Rolls‑Royce Holdings lost 1.7 to 3%. In the German market, Infineon rallied 4.7%. Continental and BMW gained about 3.1% and 2.7%, respectively. Zalando, Mercedes‑Benz, Deutsche Post, Siemens and RWE advanced 1 to 2%. Siemens Energy ended down 3.7% and Bayer settled 3% down. HeidelbergCement, Adidas, Commerzbank, Hannover Rueck ended lower by 1 to 2.3%.

United States
Following the strong upward move seen over the course of the previous session, stocks turned in a relatively lackluster performance during trading on Thursday. Despite the choppy trading, the S&P 500 and the Dow reached new record closing highs. The major averages all finished the day modestly higher. The Dow inched up 48.97 points or 0.1 percent to 38,726.33, the Nasdaq rose 37.07 points or 0.2 percent to 15,793.71 and the S&P 500 inched up 2.85 points or 0.1 percent to 4,997.91. The choppy trading on Wall Street came as traders expressed some uncertainty about whether the markets can sustain their recent upward trend. The S&P 500 reached an intraday peak slightly above 5,000 in late‑day trading but pulled back to close just below what could prove to be a key psychological level for the broad market index. Despite the lackluster performance by the broader markets, shares of Arm Holdings (ARM) skyrocketed by 47.9 percent after the chipmaker reported better than expected fiscal third quarter results and provided upbeat guidance for the current quarter. Entertainment giant Disney (DIS) also soared by 11.5 percent after reporting better than expected fiscal first quarter earnings, boosting its dividend and providing an upbeat forecast. On the other hand, shares of PayPal (PYPL) plunged by 11.2 percent after the online payments company reported fourth quarter results that exceeded estimates but provided a disappointing forecast. Semiconductor stocks saw significant strength on the heels of Arm's strong results, however, with the Philadelphia Semiconductor Index climbing by 1.6 percent.

Asia
Stock markets in East Asia and Australia were mixed on Friday. There is hardly any impetus from the USA, where the trend had been well maintained. There is no trading in Seoul and Shanghai due to public holidays, and there will also be no trading at the start of the coming week and in Shanghai for the whole of next week. Trading was shortened in Singapore and Hong Kong. In Hong Kong, trading will start again on Wednesday. The Nikkei index in Tokyo rose by 0.4 per cent to 37,020 points ‑ exceeding the round mark for the first time in 34 years.

Bonds
In the U.S. bond market, treasuries saw further downside after ending the previous session modestly lower. Subsequently, the yield on the benchmark ten‑year note, which moves opposite of its price, climbed 6.0 basis points at 4.170 percent.

Analysis
UBS raises the Intesa Sanpaolo target to EUR 4.05 (3.85) ‑ Buy

JPM lowers the Gerresheimer target to EUR 126.60 (139.60) ‑ Trader

Dt. Bank lowers the Geberit target to CHF 420 (426) – Sell