Unilever Reports Strong Underlying Growth in 2024 Final Results
Why we think this is good
Unilever's 2024 final results demonstrate resilience and underlying strength in a challenging global environment. The company achieved impressive underlying sales growth of 4.2%, driven by a robust 2.9% volume growth across all Business Groups. This performance, coupled with a significant expansion in underlying operating margin to 18.4% and a 14.7% increase in underlying EPS, showcases the company's ability to navigate market pressures effectively. The announcement of a 6.1% dividend increase and a new €1.5 billion share buyback program further underscores management's confidence in the company's financial health and future prospects. However, the sentiment is tempered by challenges in key markets like Indonesia and China, as well as expectations of slower growth in early 2025. While reported operating profit and diluted EPS decreased, largely due to non-underlying items, the strong underlying performance and positive outlook for margin improvement in 2025 support an overall positive assessment.
Key Points
- Underlying sales growth of 4.2%, with 2.9% volume growth
- Underlying operating profit up 12.6% to €11.2 billion
- Underlying operating margin expanded 170bps to 18.4%
- Underlying EPS increased 14.7% to €2.98
- Free cash flow of €6.9 billion, with 106% cash conversion
- Quarterly dividend raised by 6.1%
- New €1.5 billion share buyback announced
- Challenges in Indonesia and China markets
- Slower market growth anticipated in first half of 2025
- Ice Cream separation on track for completion by end of 2025
Summary
Unilever's 2024 final results reveal a robust underlying performance with sales growth of 4.2%, led by 2.9% volume growth. The company achieved significant margin expansion, with underlying operating margin up 170bps to 18.4%. Underlying EPS increased by 14.7% to €2.98, although reported figures were impacted by non-underlying items. The company generated strong free cash flow of €6.9 billion and announced a 6.1% dividend increase along with a new €1.5 billion share buyback program. However, challenges persist in key markets like Indonesia and China, and slower growth is anticipated in early 2025. The Ice Cream separation remains on track, potentially unlocking further value. With broker targets generally above the current share price of 4,366.00p, analysts see potential upside despite near-term headwinds.