Satisfactory start for new Unilever CEO and Moneysupermarket compares very well

Thursday, April 18, 2019 - 10:56

“The UK market struggled to find direction ahead of the Easter weekend with the FTSE 100 flat at 7,470. Consumer goods giant Unilever and tobacco manufacturer Imperial Brands did their best to lift the blue chip index but they battled weakness in household goods specialist Reckitt Benckiser and miner Glencore.

“The next wave of the corporate reporting season really kicks into action next week with results and updates from the likes of Barclays, Royal Bank of Scotland and Taylor Wimpey,” says Russ Mould, Investment Director at AJ Bell.


“Emerging markets continue to be the key driver of Unilever’s sales with like-for-like growth of 5% in the first quarter of 2019 versus a mere 0.3% gain from developed markets.

“Importantly growth was balanced between volume and price rather than being reliant on only one of them to drive up earnings.

“However, guidance for underlying sales growth to be in the lower half of its multi-year 3% to 5% range just goes to show that you cannot automatically expect Unilever’s sales to be strong all the time despite its size and market positioning.

“New chief executive Alan Jope has now been in the hot seat since January and he’s delivered a satisfactory first quarter, although nothing spectacular.

“Now comes the hard part – he needs to find a way to stop the company’s sales growth from slowing down and adapt Unilever for the new era of retail where online shopping and the rise of discounters are driving down prices.

“Jope needs to decide the shape of Unilever for the next phase of its life – whether that means slimming down the business further to concentrate on the strongest parts or making acquisitions to further increase scale in certain product lines.”


“Comparison site Moneysupermarket’s stellar first quarter numbers are all the more impressive when you consider demand for its services are often seen as being linked to the fortunes of the UK economy.

“But while the latter might be struggling, mired in political and economic uncertainty, Moneysupermarket is forging ahead investing in new technology and expanding into new areas.

“This involves investment and is perhaps why the company is not lifting full year guidance despite performing significantly better than expected in the first three months of the year.

“This cautious approach also reflects the fact that it’s first quarter numbers were boosted by a particularly strong period for energy switching ahead of flagged price increases from the big suppliers, a trend which the company expects to moderate in the remainder of the year.

“A new strategy built around a tailored service which would push products to consumers based on their needs and profile is seen as a potential game-changer for the business.

“It could create more of a subscriber-based model, with a stronger connection with users which could help address the significant marketing costs and competition associated with the price comparison market.

“Today’s statement shows how competitive that market still is. This is principally reflected in the life insurance market where rivals have been allocating more to customer incentives.”

These articles are for information purposes only and are not a personal recommendation or advice.

The daily market update is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.