Unilever PLC (UL) reported better-than-expected net profit for the fiscal 2023 and announced a new buyback program.
The company’s shares rose 3.8% in premarket trading Thursday.
For the full 2023, the consumer goods company reported earnings per share (EPS) of €2.60, while revenue came in at €59.6 billion.
Net profit amounted to €6.49 billion for the year, a decrease from €7.64 billion in 2022 but surpassing the consensus estimate of €6.23 billion from FactSet.
Turnover for the year declined slightly to €59.6 billion from €60.07 billion the previous year, primarily due to currency fluctuations and net disposals. This figure was slightly below the expected €60.04 billion.
In the fourth quarter specifically, turnover decreased by 3% to €14.2 billion, against a consensus expectation of €14.28 billion.
Unilever highlighted that its underlying sales growth for the year accelerated to 7.0%, attributed to a 6.8% increase in prices and a modest 0.2% rise in volumes. This performance was slightly under the analysts' expectations of 7.1% sales growth.
The company's underlying operating profit, which excludes exceptional and one-off items, reached €9.9 billion for the year, up from €9.68 billion in the prior year and just above the consensus of €9.88 billion.
Moreover, Unilever has also initiated a €1.5 billion share buyback program, expected to commence in the second quarter of 2024. Furthermore, the board has declared a fourth-quarter dividend of €0.4268 per share, flat compared to the year-ago period.
Gross margin increased by 200 bps in 2023 to 42.2%.
“We think the GM beat and the meaningful step up in BMI spend (largest as a % of sales since 2016) positions Unilever to continue to step up reinvestment,” Morgan Stanley analysts said.
Looking ahead, Unilever expects underlying sales growth for 2024 to range from 3% to 5%, with more balance between volume and price.
“We anticipate a modest improvement in underlying operating margin for the full year. We will deliver this through gross margin expansion, driven by a step-up in productivity and net material inflation back to more normal levels,” Unilever said in a statement.