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A good start with strong volume growth in first quarter


Average read time: 5 minutes

Today, Unilever announced its results for the first quarter of 2018, which show good volume-driven performance across all three Divisions.

Dove, Lynx and Radox shower products
  • Underlying sales growth excluding spreads 3.7% with volume 3.6% and price 0.1%
  • Emerging markets underlying sales growth 5.1% with volume 4.3% and price 0.8%
  • Share buy-back programme of up to €6 billion to start in May 2018
  • Quarterly dividend raised 8% to €0.3872 per share

Commenting on the results, CEO Paul Polman says: “The first quarter demonstrates another good volume-driven performance across all three Divisions. The broad-based growth, including over 4% volume growth in emerging markets, shows that the ‘Connected 4 Growth’ programme is working and enhancing our long-term compounding growth model. We are further improving the quality and speed of our global and local innovation as a result of a more agile, consumer-facing organisation. At the same time, we are maintaining strong delivery from our savings programmes and expecting to complete the exit from spreads in the middle of the year.

“For the full year, we continue to expect underlying sales growth in the 3%–5% range and an improvement in underlying operating margin and cash flow that keep us on track for our 2020 goals. We intend to start a share buy-back programme of up to €6 billion in May to return the expected after-tax proceeds from the spreads disposal. We are raising the dividend by 8%, reflecting confidence in our outlook.”

Our markets

In the markets in which we operate growth was around 3%, similar to 2017. We did, however, see an improvement in volumes and a lower contribution from price growth, particularly in emerging markets.

Overall performance

USG excluding spreads was 3.7% with an encouraging shift to volume-led growth compared to the prior year. Across all Divisions, this was driven by strong innovation and market development. USG including spreads was 3.4%. Turnover decreased 5.2% to €12.6 billion, which included an adverse currency impact of (9.8)% and 1.5% from acquisitions net of disposals. Emerging markets grew by 5.1% with a strong contribution from volume, while price growth was modest in a lower inflation environment. Developed markets grew by 1.1% despite continued price deflation in Europe and North America.

Beauty & Personal Care

Beauty & Personal Care grew the core with strong innovations behind purpose-led global and local brands, while expanding the portfolio in attractive segments and channels. This led to good volume growth in the first quarter, continuing the improved momentum from Q4 2017.

Skin cleansing delivered strong growth helped by new premium formats. These included aerosol mousse which delivers an improved sensorial experience and was launched across five brands in Europe, and the launch of Dove body polish in North America which exfoliates and nourishes at the same time. Skin care performed well driven by Vaseline’s successful market development campaign, Dove Nourishing Secrets, a naturals-inspired hand and body range, and the therapeutic Dove Derma Series in the US. Dollar Shave Club was introduced to the UK.

Deodorants returned to good volume growth, helped by innovations such as Rexona antibacterial and invisible, which offers both odour and stain protection, but price growth was negative in highly promotional markets.

In hair care, volume-led growth was driven by Sunsilk and Dove, helped by their successful expansion into natural propositions with on-trend ingredients, and the TRESemmé premium relaunch with improved formulation in North America and Europe.

Home Care

Home Care increased its strong emerging market footprint with its proven market development model and benefit-led innovations.

Growth in laundry was driven by successfully expanding our core brands in new, fast-growing segments, such as natural products with the premium Omo Naturals range in China. We are also uptrading consumers into the liquids segment in emerging markets, for example with Surf Excel Matics in India, and into premium formats in developed markets, such as the launch of the new Persil triple chamber liquid capsules in the UK. The Comfort detergent launch in Indonesia had a promising start, while the roll-outs of Surf into Central and Eastern Europe and Omo into Iran continued to perform well.

Comfort fabric conditioners delivered another quarter of double-digit growth, helped by rolling out the Comfort deluxe range in the UK and extending the successful Comfort Pure variant into India, its 22nd market.

Household care remained a strong growth contributor to Home Care. This was helped by continued double-digit growth of Domestos toilet blocks and Cif creams, as well as the launch of Sunlight dishwash in Indonesia with improved formulation that allows 5x faster degreasing, and Cif premium sprays, with specialist care and cleaning, in Europe.

Our water purification business performed well, while in air purification Blueair had a weak quarter impacted by an improvement in ambient air quality in China, the brand’s biggest market.

Foods & Refreshment

The Foods & Refreshment Division continued to build its presence in emerging markets and sustained a strong performance in food service channels. At the same time, we further modernised the portfolio by responding to consumer needs in fast-growing segments such as ‘free-from’, vegan, health and wellness.

Innovations behind our premium ice cream brands contributed to another good start to the year. These included the launch of Magnum Core and Praline variants, which provide our most indulgent ice cream experience yet, and the roll-out of the successful Ben & Jerry’s non-dairy platform from the US into Europe. Breyers delights’ low-calorie, high-protein variants have now been launched in 11 countries.

Leaf tea continued with the positive momentum shown in 2017, driven by strong innovations in green and other speciality teas in India, where we extended our market leadership, and strong performances in North Africa. The recently acquired Pukka Herbs organic herbal tea business had a very good first quarter.

In foods, Knorr delivered another quarter of growth above the Group average, primarily driven by cooking products in emerging markets, as well as innovations in developed markets. These included the launch of Knorr mini meals in Europe, snack products with natural and nutritious ingredients, and Knorr Selects side dishes in the US. Hellmann’s continued to communicate its strong natural claims while further extending its range with the launch of avocado and sunflower oil variants with Omega 3 and Vitamin E in the US. Volume growth improved, however pricing turned negative in an increased promotional environment.

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