The UK-based consumer goods giant Unilever PLC (GB:ULVR) is facing an investigation by the CMA (Competition and Markets Authority) to examine the company’s “green claims” regarding specific essential household items. The CMA seeks to prevent consumer deception and assess whether the company is exaggerating the environmental credentials of its products.
Unilever is a leading FMCG company selling a wide range of products, from soaps to soups to ice creams. The company owns brands like Dove, Knorr, Magnum, Lux, and Horlicks.
Green Claims or Red Flags
The current Unilever probe by the CMA is part of its big investigation into companies regarding their greenwashing. In January, the regulator extended the scope of its investigation to include consumer products.
CMA expressed concerns over certain claims made by Unilever regarding the “natural” attributes of its products, which might be overstated. Additionally, it noted that the use of some images, like green leaves, could create a false impression of the products.
Unilever, on the other hand, stated that it was “surprised and disappointed” with the announcement. The company added that it is transparent in its claims and confirmed its continued cooperation with the CMA.
In its Q3 trading update, the company reported a decline of 3.8% in its turnover compared to a year ago. The underlying sales growth was 5.2% compared to the same quarter last year. The company also confirmed its outlook for the full year. It anticipates underlying sales growth to exceed 5% and a slight expansion in the underlying operating margin.
The full-year results for FY23 will be announced on February 1, 2024.
Is Unilever a Buy Now?
Year-to-date, Unilever stock is trading at a loss of 6.3%.
On TipRanks, ULVR stock has received a Hold rating based on 10 recommendations. It includes three Buy, three Hold, and four Sell recommendations. The Unilever share price forecast is 4,110p, which implies an upside of 8.5% on the current trading price.
