Unilever PLC (LSE:ULVR), maker of store cupboard staples such as Marmite and Lipton's Tea, reports its first-quarter results on Thursday (24 April), and after a rocky start to the year, Barclays thinks even modest growth could help calm investor concerns.
The consumer goods group signalled back in February that it would begin slowly, and was promptly punished by the market.
Since then, though, peers like Procter & Gamble have echoed similar caution, making Unilever’s warning look more measured in hindsight.
Barclays is forecasting organic sales growth (OSG) of 2.5% for the quarter, just below the 2.7% market consensus, but notes that anything at or above that level is likely to be well received.
Attention will be on emerging markets, particularly India and Latin America.
Unilever’s new CEO, Fernando Fernandez, told Barclays in a recent meeting that there were “no skeletons in the closet” behind the abrupt leadership change and reiterated confidence in a sales acceleration through the rest of the year.
The company is leaning on a heavy innovation pipeline and higher pricing in Q2 to lift performance.
India remains a key focus, with hopes of macro tailwinds, such as lower interest rates and softening food inflation, supporting growth.
But geopolitical uncertainty and tariffs remain a risk. China and Indonesia, meanwhile, are undergoing what Unilever describes as a “reset”.
Margins will also be in the spotlight. Unilever faces tough comparisons in the first half after a particularly strong margin performance last year.
Barclays expects full-year margins to average around 18.7%, though it believes the current consensus may be too optimistic for H1 and too conservative for H2. Management may use the results to reset those expectations more clearly.
Investors will also be watching for progress on Unilever’s €1.5bn share buyback and potential updates on its planned ice cream business separation and wider restructuring, which includes 7,500 job cuts. While another buyback announcement isn’t Barclays’ base case, it doesn’t rule it out.
For now, the key question remains whether Unilever can back up talk of a stronger second half with numbers, and convince investors that its slow start to the year is just that.