Consistent, competitive and profitable growth in challenging markets
Today, Unilever announced its results for the first half of 2016, which show that the company is growing consistently and profitably despite a challenging environment.
- Underlying sales growth 4.7%, ahead of our markets, with volume up 2.2%
- Sales increased by 5.4% at constant exchange rates and decreased by 2.6% at current exchange rates
- Emerging markets underlying sales growth 8.0% with volume up 2.9%
Commenting on the results, CEO Paul Polman, says: “Our first-half results further demonstrate the progress we have made in the transformation of Unilever to deliver consistent, competitive, profitable and responsible growth. Despite a challenging environment with slower global economic growth and intensifying geopolitical instability, we have again grown profitably and ahead of our markets driven by strong innovations.
“This consistency of performance, achieved during a period of high volatility and accelerating change, shows that our long-term focus is paying off. We are seeing the benefits from delivery against the four differentiated Category strategies that continue to guide investment in our brands, infrastructure and people.
“We have been preparing ourselves for tougher market conditions in 2016 and do not see any sign of an improving global economy. Against this backdrop we continue to drive agility and cost discipline, implementing the key initiatives announced at the end of last year: Net Revenue Management, Zero-Based Budgeting and ‘Connected 4 Growth’ which is the next stage in our organisational transformation.
“Our priorities continue to be volume-driven growth ahead of our markets, steady improvement in core operating margin and strong cash flow.”
Consumer demand remained weak and in the markets in which we operate volumes have slowed further, with market volume growth low in emerging markets and negative in Europe and in North America.
Underlying sales growth in the first half was broad-based and driven by market share gains across the four Divisions which continued to deliver progress against their strategic priorities: Beauty & Personal Care and Foods & Refreshment achieved improved growth while maintaining strong profitability. Home Care and Refreshment improved margins while continuing to grow competitively.
Emerging markets grew 8.0% driven by good volume growth in Asia and price growth in Latin America. Developed markets grew 0.2% with volume growth more than offsetting price deflation in Europe.
Beauty & Personal Care
Beauty & Personal Care volumes improved across all sub-divisions driven by innovations that grow the core of our brands and extend into more premium segments.
Deodorants performed strongly, supported by new variants of the successful dry sprays in North America and by the roll-out of Rexona Antibacterial that provides 10x more odour protection into 36 new countries.
We are addressing the higher growth male grooming segment with the launch of the new Axe range, opening the brand to a broader audience.
Good growth in hair was supported by the successful Sunsilk relaunch and by the TRESemmé Beauty-Full Volume range with a unique reverse conditioning system.
In skin cleansing Lifebuoy demonstrated strong volume-driven growth across emerging markets driven by our handwashing campaign.
Foods & Refreshment
Growth in Foods & Refreshment accelerated with a good performance in savoury and dressings, although spreads continued to decline as a result of the market contraction in developed countries.
Savoury showed good growth driven by cooking products in emerging markets, innovations around naturalness such as Knorr Mealmakers with 100% natural ingredients in Europe, and our local brands such as Bango in Indonesia and Robertsons in South Africa.
Hellmann’s grew strongly in dressings helped by the convenient squeeze packaging with proprietary easy-out technology, the launch of Carefully Crafted and Organic variants, and its expansion into Italy and Belgium.
In spreads, Flora highlighted its plant-based health credentials with a new advertising campaign and introduced a dairy-free variant in the UK.
Home Care continued to deliver broad-based growth, ahead of our markets. This was driven by innovations in higher margin segments and the continued roll-out of the new Omo with enhanced formulation and improved cleaning technology which has now reached 27 countries.
After the success of Omo pre-treaters and stain removers in Brazil, we are rolling them out in Latin America, South East Asia and China.
Fabric conditioners grew at double-digit rates, helped by new variants of Comfort Intense with its concentrated, double-encapsulated fragrance technology that delivers long-lasting freshness.
In household care, growth was driven by Cif’s premium Power and Shine sprays and Domestos toilet blocks in Europe as well as the continued expansion of our brands into new markets such as Iran.
Ice cream delivered good growth driven by margin-accretive innovations behind premium brands, such as the new Magnum Double range, the Ben & Jerry’s ‘Wich sandwich and dairy free range, as well as premium desserts under Breyer’s Gelato and Carte D’Or Sorbet. We continued to develop the value segment with a new yoghurt variant of the smaller-sized Cornetto at a recommended resale price of €1.
In leaf tea, we have been building our presence in more premium products with T2 and machine-compatible tea capsules. Lipton and PG Tips continued to extend in the faster-growing green and speciality teas segments where we are still under-represented.
This announcement may contain forward-looking statements, including ‘forward-looking statements’ within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words such as ‘will’, ‘aim’, ‘expects’, ‘anticipates’, ‘intends’, ‘looks’, ‘believes’, ‘vision’, or the negative of these terms and other similar expressions of future performance or results, and their negatives, are intended to identify such forward-looking statements. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Unilever Group (the “Group”). They are not historical facts, nor are they guarantees of future performance.
Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Among other risks and uncertainties, the material or principal factors which could cause actual results to differ materially are: Unilever’s global brands not meeting consumer preferences; Unilever’s ability to innovate and remain competitive; Unilever’s investment choices in its portfolio management; inability to find sustainable solutions to support long-term growth; customer relationships; the recruitment and retention of talented employees; disruptions in our supply chain; the cost of raw materials and commodities; the production of safe and high quality products; secure and reliable IT infrastructure; successful execution of acquisitions, divestitures and business transformation projects; economic and political risks and natural disasters; financial risks; failure to meet high and ethical standards; and failure to comply with laws and regulations, including tax laws. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Further details of potential risks and uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including in the Group’s Annual Report on Form 20-F for the year ended 31 December 2015 and the Annual Report and Accounts 2015.