Unilever hits out at its own results for 2023 branding them 'disappointing'

How much? Consumers desert big brands to save money, including at Unilever’s ice cream division, which makes Magnum and Cornetto (Michael Cockerham/Unilever/PA) (PA Media)
How much? Consumers desert big brands to save money, including at Unilever’s ice cream division, which makes Magnum and Cornetto (Michael Cockerham/Unilever/PA) (PA Media)

Unilever, the FTSE 100 multinational behind a series of household-name brands from Dove Soap to Hellmann’s mayonnaise, repeatedly called its own performance “disappointing” today.

The forthright words came as the fourth-largest company in the UK reported a drop in sales for 2023. Consumers switching to cut-price alternatives during the cost-of-living crisis were not coming back to big-name consumer goods.

Ice cream sales took much of the heat at the 95-year-old, £98 billion company. That part of the business bore the brunt of cost inflation leading to higher prices for Unilever’s range, which most famously includes Ben & Jerry’s and Magnum.

Unilever said: “Ice Cream's underlying sales growth was disappointing at 2.3%, with price growth of 8.8% and a volume decline of 6.0%, reflecting the impact of downtrading”.  It was worse for the chilly sweet treats designed to be eaten at home, with sales in that category “down in the high single digits”.

Out-of-home ice cream, which makes up around 40% of the divison, grew “in the high single digits”, boosted by limited edition  Starchaser and Sunlover Magnums, which were the brand’s “biggest ever innovation”. But there was also “less favourable summer weather versus last year, mainly in Europe”.

It all added up to what Unilever called  “a disappointing year” for ice cream. With Sales in 2023 were just shy of €8 billion (£6.7 billon).

The move by consumers to cheaper alternatives was symbolic of s pattern across much of the group, which operates in 190 countries and has 3.4 billion customers a day. Overall, Unilever’s group turnover slipped 0.8% to €59.6 billion (£51.1 billion)

In Europe, “private label gained share across most categories as consumer looked for value propositions in a high inflation environment”, Unilever explained. It also said the percentage of its businesses winning market share was “disappointing” at 37%.

“This poor performance reflects share losses to private label in Europe, consumer shifts to super-premium segments in North America ... Our competitiveness is not good enough,” it said.

Unilever’s chief executive, Hein Schumacher, said: “Our competitiveness remains disappointing and overall performance needs to improve. We are working to address this by improving our execution to unlock Unilever's full potential.”

Schumacher, a former Heinz executive, was appointed to the top job in July, taking over from Alan Jope, a company insider who worked for Unilever for 38 years. Schumacher unveiled a “Growth Action Plan” in October and said today the work was in its “early stages”, adding: “there is much to do but we are moving with speed and urgency.”

The word “disappointing” appeared four times in Unilever’s announcement of its 2023 results, catching the eye of City analysts. But Charlie Huggins, a portfolio manager at Wealth Club, said it was “too soon” to judge the turnaround plan.

“Investors should not expect quick fixes. The plan isn't just about cutting costs and increasing efficiency. It's designed to make Unilever a more innovative business, with stronger, faster growing brands. This requires increased brand and marketing investment, and will not be quick or easy to achieve.”

Unilever also announced plans today for a €1.5 billion payday for investors via a share buyback. The stock rose 122p to 4024p.