Consistent, competitive growth in challenging markets
London/Rotterdam – Today, Unilever announced its results for the first quarter of 2016.
- Underlying sales growth 4.7% with emerging markets up 8.3%
- Underlying volume growth 2.6% and pricing up 2.0%
- Turnover declined 2.0% to €12.5 billion including a negative currency impact of 7.1%
Commenting on the results, CEO Paul Polman says: “The first quarter demonstrates a strong volume-driven performance, following on from a good delivery in 2015. We are maintaining momentum despite a tougher external environment, with all four divisions gaining market share. This broad-based growth, including 8% in emerging markets, shows the validity of our strategy, active portfolio management and a step-up in innovation.
“With markets remaining volatile, we continue to focus on driving agility and resilience in our business through the key programmes which we set out at the end of last year: net revenue management, zero based budgeting and the next stage in our continued organisational transformation. This will position us well to deliver another year of volume-driven growth ahead of our markets, steady improvement in core operating margin and strong cash flow. These underpin sustained long-term value creation for our shareholders.”
Consumer demand remained fragile. Volume growth slowed further in the markets in which we operate, with market growth weak in emerging markets, negligible in North America and negative in Europe.
Underlying sales growth in the first quarter was driven by market share gains across all four divisions. Emerging markets grew by 8.3% with an increased contribution from volume. There was strong underlying price growth in Latin America and virtually no pricing in Asia. Developed markets declined by 0.3% with volume growth offset by widespread price deflation in Europe.
Beauty & Personal Care
Beauty & Personal Care grew ahead of the group average driven by innovations that grow the core of our brands and extend into more premium segments. At the same time we are addressing the higher growth male grooming segment with the launch of the new Axe range, opening the brand to a broader audience.
Deodorants continued to perform 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 15 countries. In hair, TRESemmé launched the Beauty-Full Volume range with a unique reverse conditioning system that delivers softer and more voluminous looking hair. In skin cleansing, Lifebuoy demonstrated strong volume-driven growth across our emerging markets helped by digital and local activation behind our handwashing campaign.
Good growth in savoury was led by cooking products in emerging markets and by innovations around naturalness such as Knorr Mealmakers with 100% natural ingredients in Europe. Hellmann’s drove strong growth in dressings driven by a new ‘Real’ campaign, the success of the convenient squeeze packaging with proprietary easy-out technology, and the launch of Carefully Crafted and Organic variants.
The Baking, Cooking & Spreads unit repositioned Flora in the UK with a campaign that highlights its plant-based health credentials and introduces a dairy-free variant. Sales in spreads declined as a result of the continued market contraction in developed countries.
Home Care delivered another quarter of strong, broad-based growth, well ahead of our markets. This was driven by innovations in higher margin segments and the new Omo with enhanced formulation and improved cleaning technology which has now reached 18 countries. After the success of Omo pre-treaters and stain removers in Brazil, we are rolling them out in Latin America.
Fabric conditioners grew at double-digit rates, helped by new variants of Comfort Intense with its concentrated, double-encapsulated fragrance technology that deliver long-lasting freshness. Household care remained a strong growth and margin contributor to Home Care, driven by Cif’s premium Power and Shine sprays in Europe and the continued expansion of our brands in emerging markets, the most recent being Sunlight in China.
Ice cream continued its strong momentum of the last two years driven by margin-accretive innovations behind premium brands such as the new Magnum Double range, the Ben & Jerry’s Wich cookie-dough sandwich and premium desserts under Breyer’s Gelato and Carte D’Or Sorbet. We are addressing the value segment with a new yoghurt variant of the smaller-sized Cornetto at a recommended resale price of €1.
In leaf tea, we are accelerating the move towards more premium products with T2 and machine-compatible tea capsules. Lipton and PG Tips are continuing to extend their presence in the faster-growing green, herbal and speciality teas segments.
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 ethical standards; and managing regulatory, tax and legal matters. Further details of potential risks and uncertainties affecting the Group are described in the Group's filings with the London Stock Exchange, NYSE Euronext in Amsterdam and the US Securities and Exchange Commission, including the Group's Annual Report on Form 20-F for the year ended 31 December 2013 and Annual Report and Accounts 2013. These forward-looking statements speak only as of the date of this announcement. 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.