Emerging Markets And Digital Commerce Will Transform Future Landscape

Key Takeaways

• Shifting focus to premium, science-led products and divesting non-core brands is streamlining operations, boosting margins, and enhancing long-term profitability.
  
• Emphasis on digital expansion, emerging markets, and brand investment is fueling sustained revenue growth and stronger competitive positioning.
  
• Intensifying competition, regional underperformance, input cost pressures, portfolio streamlining, and elevated regulatory scrutiny threaten sustainable revenue growth, margin expansion, and brand stability.

Catalysts

Operates as a fast-moving consumer goods company in the Asia Pacific, Africa, the Americas, and Europe.

• Acceleration of volume growth in key emerging markets (India, China, Indonesia), supported by rising disposable incomes, urbanization, and rapid expansion in digital/e-commerce channels, is expected to drive sustained top-line revenue growth as these markets recover and Unilever gains market share.
  
• Portfolio transformation with a sharper focus on premium and science-led Personal Care and Beauty & Wellbeing products, coupled with bolt-on acquisitions of fast-growing digitally native brands, is increasing exposure to higher-margin categories and supporting long-term margin and earnings expansion.
  
• Strategic divestitures, including the demerger of Ice Cream and continued disposal of non-core food brands, are simplifying the business model and structurally raising the gross and operating margin profile of the remaining company, directly improving profitability and ROIC.
  
• Improved productivity via supply chain digitization, procurement efficiencies, and disciplined cost management (targeted cost savings of €650 million in 2025) are enhancing gross margins, providing additional fuel for competitive brand investment, and supporting higher sustainable earnings growth.
  
• Increased investment in brand marketing (15–16% of revenue, notably in Power Brands and digital commerce) is driving innovation, strengthening brand equity, and enabling Unilever to better capture evolving consumer demand in wellness, health, and premiumization, likely resulting in higher revenue growth and maintained or expanded market share.

Unilever Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Unilever's revenue will grow by 2.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 9.3% today to 12.5% in 3 years time.
• Analysts expect earnings to reach €8.1 billion (and earnings per share of €3.27) by about September 2028, up from €5.6 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.1x on those 2028 earnings, down from 24.6x today. This future PE is greater than the current PE for the US Personal Products industry at 18.7x.
• Analysts expect the number of shares outstanding to decline by 0.96% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.38%, as per the Simply Wall St company report.

Unilever Future Earnings Per Share Growth

Risks

• Intensifying competition from private label and local/niche brands-especially in personal care and food-in key markets like the US and Europe threatens Unilever's long-term pricing power and could erode market share, undermining revenue growth and margin expansion.
  
• Weak emerging market performance, particularly chronic volume declines in Latin America and flat or negative trends in China and Indonesia, exposes the company to ongoing regional underperformance, creating persistent drag on group revenue and structural headwinds for growth.
  
• Ongoing input cost inflation (commodities, packaging, transport) and adverse currency movements, especially pronounced in 2025, have pressured operating margins and led to reliance on price increases that may not be sustainable, risking future profitability and earnings.
  
• The company's continuing portfolio rationalization-including divestitures like the Ice Cream unit and underperforming food brands-could reduce overall scale benefits and increase business concentration, potentially leading to revenue volatility, reduced diversification, and uneven margin trajectory if not offset by sufficient growth in premium categories.
  
• Heightened regulatory, environmental, and consumer scrutiny around sustainability, ingredient transparency, and global tax regimes-increasing compliance costs and reputational risks-may constrain long-term margin improvement and require ongoing heavy investment to maintain brand equity and customer trust.

Valuation

• The analysts have a consensus price target of £50.35 for Unilever based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £59.26, and the most bearish reporting a price target of just £38.97.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €64.8 billion, earnings will come to €8.1 billion, and it would be trading on a PE ratio of 22.1x, assuming you use a discount rate of 8.4%.
• Given the current share price of £47.62, the analyst price target of £50.35 is 5.4% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.