London (AFP) – British consumer goods giant Unilever on Thursday announced falling net profits for 2024, hit by exiting Russia and other restructuring costs. Profit after tax dropped 11 percent to 5.7 billion euros ($5.9 billion) compared with 2023, said the group whose products include Magnum ice cream, Cif surface cleaner, and Dove soap. Sales increased nearly two percent to 60.8 billion euros.
“Today’s results reflect a year of significant activity as we focused on transforming Unilever into a consistently higher performing business,” said chief executive Hein Schumacher. The fall in profits reflected the sale of assets and “higher restructuring costs as a result of accelerating the productivity programme,” the company said in its earnings statement. Unilever at the end of last year sold its subsidiary in Russia to local peer Arnest Group, finally joining other multinationals in exiting the country following its invasion of Ukraine in February 2022.
As part of an overhaul, Unilever is also axing thousands of jobs and separating out its ice cream business in a bid to revive growth, as the group comes under pressure from activist investors including American billionaire Nelson Peltz. Following Thursday’s update, shares in the company slumped nearly seven percent on London’s top-tier FTSE 100 index, which was down 0.7 percent overall in late morning deals.
Unilever, which owns Ben & Jerry’s, added that it will list its demerged ice cream business on the Amsterdam, London, and New York stock exchanges after completing separation of the division by the end of the year. The decision to create a standalone ice cream business, announced last year, is expected to deliver savings of 800 million euros by 2026 and cut 7,500 mainly office-based roles. Unilever on Thursday said it was “creating a leaner and more accountable organisation.”
The overhaul plans also include Unilever focusing on its 30 highest performing brands, which make up 70 percent of the group’s revenue. The company provided cautious guidance for the year ahead, with only subdued market growth expected in the near-term. “Unilever is still at the mercy of the global economy and consumers’ ability and willingness to splash the cash,” said Russ Mould, investment director at AJ Bell. “Many consumers are watching their spending and opting for supermarket own-label products rather than the ‘power brands’ that the likes of Unilever own. The challenge could intensify if inflation rears its ugly head and interest rates stay higher for longer,” Mould added.
© 2024 AFP
