- Underlying sales growth 3.7%, ahead of our markets, with price up 2.8% and volume up 0.9%
- Sales increased by 4.3% at constant exchange rates while turnover, which is at current rates, declined 1.0%
- Emerging markets underlying sales growth 6.5% with price up 5.4% and volume up 1.1%
- Core operating margin at 15.3% up 50bps, operating margin at 14.8% up 70bps
- Free cash flow of €4.8 billion, in line with the very strong delivery of 2015
- Constant core earnings per share up 7%, up 3% at current exchange rates
Comment from CEO Paul Polman
Commenting on the results, Unilever CEO Paul Polman says: “We have delivered another good all-round performance despite severe economic disruptions, particularly in India and Brazil, two of our largest markets. This further demonstrates the progress we have made in transforming Unilever into a more resilient business. We have again grown ahead of our markets, driven by strong innovations that support our category strategies.
“At a time of unprecedented global change, ‘Connected 4 Growth’ – the next stage in our transformation – will make Unilever simpler, faster and more connected with our consumers and customers, and we are already starting to see positive results. We are also making further progress in reshaping our portfolio, adding businesses in fast-growing segments with the acquisitions of Dollar Shave Club, Blueair, Seventh Generation and Living Proof.
“Our priorities for 2017 continue to be volume growth ahead of our markets, a further increase in core operating margin and strong cash flow. The tough market conditions which made the end of the year particularly challenging are likely to continue in the first half of 2017. Against this background, we expect a slow start with growth improving as the year progresses.”
Market conditions have been challenging throughout the year, and particularly so in the fourth quarter. In the markets in which we operate, volumes were flat in aggregate. In a number of countries, volumes have been weak as consumers and retailers adjust to devaluation-led cost increases. The economic crisis in Brazil and removal of Rs.500 and Rs.1,000 notes from circulation in India presented significant additional headwinds.
Beauty & Personal care
Beauty & Personal Care continued to grow the core through innovations while extending into more premium segments. Deodorants performed well, driven by the continued success of dry sprays in North America and Rexona Antibacterial with 10x more odour protection, which is now in over 50 countries.
In hair, growth was driven by the successful Sunsilk relaunch and by the TRESemmé Beauty-Full Volume range with unique reverse conditioning system. In skin cleansing, Lifebuoy demonstrated strong growth across emerging markets, driven by our handwashing campaign and further roll-outs into Kenya and Ethiopia. Our biggest Personal Care brand Dove had another good year supported by the strong growth of the premium and the Men+Care ranges.
Foods & Refreshment
Foods & Refreshment sustained its return to growth with good performances in dressings, driven by the squeezy packs with easy-out technology and organic variants, and savoury, led by cooking products in emerging markets. Hellmann’s and Knorr both delivered another year of strong growth by successfully modernising their ranges, with extensions into organic variants and with packaging that highlights the naturalness of their ingredients. Knorr’s digital campaign ‘Love at First Taste’ reached more than 100 million people. Sales in spreads declined, as modest growth in emerging markets was offset by the continued but slowing decline in developed markets.
Home Care delivered another year of growth ahead of our markets driven by strong innovations. Surf grew double-digits, helped by the launch of Surf Sensations, the first fabrics cleaner with perfume-like fragrance, and the roll-out of the brand into Central and Eastern Europe. Our value brand Brilhante contributed to good volume growth in Latin America, catering to hard-pressed consumers.
The successful roll-out of Omo with enhanced formulation and improved cleaning technology has now reached 27 countries. Fabric conditioners grew strongly, supported by the new variants of Comfort Intense with double-encapsulated fragrance technology that delivers long-lasting freshness. In household care, growth was driven by the premium Cif Power and Shine sprays and the roll-out of Domestos toilet blocks in Europe.
Growth in ice cream was driven by margin-accretive innovations behind our premium brands. These included the Magnum Double range, the Ben & Jerry’s ‘Wich sandwich and dairy free range, as well as new variants of Talenti, the premium gelato brand which has grown 60% since acquisition two years ago.
In leaf tea, growth improved in emerging markets but was held back by our black tea business in developed markets. We are continuing to build our presence in more premium segments with good growth from T2 and specialty teas. We introduced Pure Leaf, already well-established in ready-to-drink tea, as a premium brand in our leaf tea portfolio in the US.