Sales of Hellman’s mayonnaise surged thanks to Super Bowl ad
Unilever (LON:ULVR) said on Thursday that it will buy back €3bn of shares after robust sales, specifically of ice cream and mayonnaise, led the company to report strong growth during Q1.
The owner of brands including Marmite, Hellman’s mayonnaise and Magnum ice cream stated its intention to repurchase stock in May and finalise the programme by the end of the year.
The decision came about as the FTSE 100 company recorded growth in its underlying sales of 5.7% for Q1, easily surpassing expectations of 3.9%.
The company’s strong results came about as Unilever’s foods and refreshment division grew by 9.8%, in part thanks to people being able to socialise outdoors, while the company’s marketing company, including an advert during the Super Bowl, helped propel sales to double-digits.
Growth came largely thanks to the respective recoveries in China and India, although the latter is experiencing a worrying spike in Covid-19 cases.
The plan for the buyback “reflects our strong cash flow delivery and balance sheet position,” said chief financial officer Graeme Pitkethly.
“We have had a good start to the year. We are growing faster than our markets,” Pitkethly said.
A year or two ago, the market was questioning whether Unilever could grow at all, yet now it is beating its sales growth target.
AJ Bell investment director Russ Mould, reflected on the company’s performance:
“Amid expectations of inflation accelerating this year, Unilever’s pricing power strengths will be put to the test,” said Mould.
“It has flagged additional supply chain costs and raw material inflation, which is putting pressure on margins, so the solution would be to pass on those costs to the end customer.”
“Of the 5.7% sales growth in the first quarter, 1% can be attributed to higher selling prices and the rest greater sales volumes, so it is already displaying pricing power, particularly in its food and refreshment products.”