By Dominic Chopping

Unilever's underlying sales grew more than expected in the third quarter as shoppers welcomed easing price hikes and began buying more of the company's branded products.

The consumer-goods giant behind brands such as Dove soap and Knorr stock cubes said sales of its top brands that make up most of it turnover proved popular with consumers in the quarter, with particularly strong sales of its Dove, Liquid I.V., Comfort and Magnum products.

Underlying sales grew 4.5% in the quarter, compared with 4.2% expected by analysts, while prices increased just 0.9% on the year.

The results come as the consumer-goods industry has begun dialing back the pace of price increases in an attempt to win back hard-pressed shoppers that traded down to cheaper products during the yearslong cost-of-living crisis.

After several years of unprecedented inflation, the likes of Unilever, Nestle and Danone all raised prices to pass on the higher costs of everything from ingredients to packaging and logistics. But as consumer spending power diminished, many shoppers traded down to unbranded alternatives. With inflation now under control, the industry is fighting to regain those lost customers by limiting prices rises, while some are offering more discounts.

"We are starting to see the positive impact from scaling fewer, bigger innovations across our markets supported by increased brand investment," Unilever Chief Executive Hein Schumacher said.

Unilever said the volume of goods sold in the quarter rose 3.6%, better than the 3.2% analysts had expected.

Unilever cut prices overall in Europe during the quarter, which boosted sales and volumes, as its ice cream, home care and personal care all performed well.

In the Americas, it also saw strong sales and volume growth as it increased prices by 1.1%, with the Vaseline, Dove and Popsicle brands all helping drive growth in the region.

However, China continued to be weighed by weak consumer sentiment and the company has appointed new leadership in the country as it switches product and strategic focus.

In Indonesia, where the company has lost market share and faced issues from a boycott of western brands over the war in Gaza, underlying sales slumped 18%. Unilever said it is taking significant actions to stabilize prices and reset stock levels but the benefits of the changes in Indonesia and China aren't expected to be felt until the second half of 2025, it said.

The company is in the middle of a group turnaround that includes a spinoff or sale of its ice-cream business and cost-cutting measures that will shed 7,500 jobs globally. It said Thursday that it has started implementing efficiency measures while the ice cream separation is on track to be completed by the end of 2025.

It still expects to report underlying sales growth for 2024 within its multiyear range of 3% to 5%, with the majority of the growth driven by volume. Underlying operating margin for the full year is still expected to be at least 18%.

RBC Capital Markets analyst James Edwardes Jones said the company's earnings beat and reiterated guidance is uneventful, but that in itself "is a testament to the extent to which Unilever has been rehabilitated."

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

October 24, 2024 03:44 ET (07:44 GMT)

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