Solid growth in challenging markets
Today, Unilever released its results for the first half 2014 which show consistent top and bottom line progress despite significant headwinds.
First half highlights
Underlying sales growth 3.7% with emerging markets up 6.6%
Underlying volume growth 1.9% and price up 1.7%
Turnover decreased by 5.5% to €24.1 billion with currency down (8.5)%
Core operating margin stable at 14.0% at current exchange rates, up 30bps at constant exchange rates
Operating profit up 13% reflecting profits on disposal
Core earnings per share up 2% to €0.78
Second quarter highlights
Underlying sales growth 3.8% with underlying volume growth 1.9% and price up 1.9%
Commenting on the results, CEO Paul Polman said: “We continued to grow ahead of our markets driven by strong innovations such as Ben & Jerry’s Cores, compressed deodorants in Europe, REGENERATE Enamel Science in oral and Skip Dual Action capsules. “At the same time we continue to invest for the long-term with our programme to take our brands into new countries with the launches of Lifebuoy in China, Omo in Arabia and Clear in Japan.
“We made further progress in strengthening our portfolio with the acquisition of a majority stake in Qinyuan, the Chinese water purification business, and the disposals of the Ragu and Bertolli pasta sauces brands in the US and, more recently, the Slim.Fast business.”
Market growth continued to slow in emerging countries, particularly in Asia, as macro-economic pressures weighed on consumer spending in our divisions. Developed markets remained weak with little sign of any recovery in North America or Europe.
Emerging markets grew 6.6% with price up 4.4% and volume growth of 2.1%. Developed markets grew by 0.3% in the second quarter, with positive volume growth partially offset by declining price. All divisions grew with good performances from Home Care, Beauty & Personal Care and Refreshment.
Beauty & Personal Care
Beauty & Personal Care continued to grow ahead of slowing markets underpinned by a strong innovation programme. Deodorants saw the continued success of the compressed aerosol range in Europe, good growth for Rexona with the successful Do:More campaign, the positive impact of new communication behind Dove Invisible Dry and the introduction of new packaging for Axe. In oral care we introduced a new brand, REGENERATE Enamel Science, in the United Kingdom. This is a premium proposition and is the first toothpaste and serum system that regenerates enamel with exactly the same mineral which makes up tooth enamel.
In hair Clear has been successfully introduced in Japan and relaunched in key markets such as Brazil and China. TRESemmé benefited from the success of the 7 Day Keratin Smooth range, and Dove Oxygen Moisture made good progress in the US.
Skin cleansing saw continued strong growth for Lifebuoy reflecting the success of the proposition to protect against ten infection causing germs and the introduction of the brand in China. Dove continued to deliver broad-based growth and Lux benefited from the relaunch in China and South East Asia. In skin care Fair & Lovely delivered strong growth and the Dove Purely Pampering range was extended into nourishing body oil.
Foods growth in the second quarter reflected the impact of the late Easter and improved market shares but the markets in North America and Europe remained challenging while emerging markets continued to grow in mid single digits.
Savoury grew on the back of the ‘What’s for dinner tonight?’ market development campaign and good progress in emerging markets. Dressings growth stepped up and we saw good performances from Hellmann’s with Olive Oil in the US and the extension of the new squeezy packaging in Brazil.
While we gained share in margarine, spreads performance reflected the decline of the market. We continued to improve the taste of our products, to roll out the successful ‘It takes a village’ campaign for Pro.Activ and to introduce blends of vegetable oil and butter, such as Gold by Flora and Bertolli with Butter in the UK, to meet a broader range of consumer taste preferences.
Ice cream performed strongly in the quarter. Magnum benefited from a strong programme of activities including its 25th anniversary, the launch of Magnum Infinity in the US and Indonesia, and the launch of Magnum Mini in Brazil. Ben & Jerry’s grew well supported by innovations such as Cores and the introduction of a mini cup format in Japan while Cornetto responded well to relaunches in North Asia and Europe.
The performance of leaf tea was mixed. We saw good growth in India and Turkey, and also in the US driven by the success of Lipton K-Cups® and new liquid concentrate. Sales in Russia and Saudi Arabia were soft. Ades soy drink continued to recover from the impact of last year’s product recall in Brazil.
Laundry growth remained competitive and well-balanced between volume and price. Following a good response to the launch in France under the Skip brand, Persil Dual Action capsules were launched in the UK. Omo was re-introduced in Saudi Arabia and Skip Small & Mighty liquids were launched in South Africa. In household care we grew ahead of slowing markets. Cif multi-purpose sprays and Domestos Zero Stain toilet cleaner were launched in Vietnam and Indonesia and Domestos Ultra Power was launched in Russia.
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