- Underperformed EU staples Ytd, trading at a 16.9x P/E— below its 1Yr average (17.7x) and Nestle (18x)
- Price growth over the last quarter reflect successful focus on premium products and high growth regions
- The latest data show robust growth and market share capture in both the US and EU despite consumer weakness concerns
Unilever has underperformed the broader staples sector in 2025, trading at a 16.9x P/E— below its 52week average (17.7x) and its closest peer Nestle (18x)—on the back of concerns around retailer destocking, Dollar weakness and expectations of a weaker consumer, despite the latest Umich Consumer Confidence showing signs of improvement. The latest scanner data also point to continued robust growth and market share capture in both the US and EU markets (42% of Group revenue).
APAC, which accounts for 43% of group revenues, is recovering after several weak quarters and is expected to show significant improvement in H2. India continues to outperform on rural consumption and category innovation, while China and Indonesia are stabilizing, aided by revamped brand strategies and a higher-value product mix. Unilever’s innovation pipeline now drives a significantly higher portion of incremental sales than in prior years, with new product launches increasingly focused in premium segments, reflected in the price growth over the last few quarters. Breakthrough products like WonderWash and whole-body deodorants. demonstrate a shift from brand refreshes to category creation with Unilever’s US and Indian markets driving this shift, particularly in Health, Wellness, and Prestige Beauty, with brands like Dove, Nutrafol, and K18 gaining share.
The spin-off of the Ice Cream unit by early 2026 marks a structural catalyst. Magnum, which saw 100bps gain in market share over the last few months, exits at a time of operational strength, while the remaining company will focus on higher-margin categories—Food, Personal Care, and Beauty. Recent divestitures (e.g., The Vegetarian Butcher, Graze) and bolt-on acquisitions (e.g., Dr. Squatch, Wild) further align the group with premium, high-return assets. Management is aiming to shift half of group sales to premium segments from currently a third and reallocate investment to key growth markets like the US and India, aiming to have 50% of the group’s revenue from these high growth regions alone from currently 35% (Post ice cream spin off).
The company reports its Q2 results on July 31 which we see as a likely catalyst to drive renewed confidence in the name if management reiterates their expectations of an Asian led acceleration of growth in H2 and maintains the 3% organic sales growth seen in Q1. With 6M ATM IV undemanding at a 2YPc23, we propose Long Dec25 56 Calls costing 1.6% of underlying (Spot ref 52.2 Fut. ref.51.8).