Unilever Earnings: Solid First Half With Strong Gross Margin Expansion Inspiring Confidence

Unilever's first-half results showed underlying sales growth of 4.1%, ahead of company-compiled consensus of 4.4%. Growth was driven by volumes, which were up 2.6%, driven in turn by beauty's strong outperformance, up 5.4%. More importantly, margins improved substantially in the first half, with underlying operating margin up by 250 basis points to 19.6%, similar to peak levels seen back in 2020. This impressive bottom-line performance was driven by gross margin expansion of 420 basis points partly offset by stepped-up marketing investments (up 180 basis points). From a volume perspective, volume growth accelerated for a third consecutive quarter to positive 2.9% in the second quarter, driven by beauty and wellbeing and more specifically prestige beauty (Hourglass) and supplements (Liquid IV, Nutrafol). The company announced a capital markets day in London on Nov. 22, 2024.