First quarter results show solid growth led by emerging markets
Today, Unilever announced its results for the first quarter of 2019, which show underlying sales growth of 3.1%, led by our emerging market business which grew 5.0%.
- Underlying sales grew 3.1% with 1.2% from volume and 1.9% from price
- Underlying sales in emerging markets grew 5.0%
- Turnover decreased 1.6% driven by the disposal of spreads
- Quarterly dividend increased by 6% to €0.4104 per share
Commenting on the results, CEO Alan Jope says: “We have delivered a solid start that keeps us on track for our full year expectations. Growth was led by emerging markets and was balanced between volume and price.
“Accelerating growth is our number one priority. It requires both great execution and a continued strategic shift into faster growth segments and channels. We saw good performance in key growth channels including out-of-home and e-commerce and benefited from stronger global innovations and faster and more relevant local innovation. The acquisitions we have made since 2015 collectively grew double-digit in the first quarter. With the leadership changes announced in March, we are building the right team to drive our growth agenda.
“For the full year we continue to expect underlying sales growth to be in the lower half of our multi-year 3% – 5% range, an improvement in underlying operating margin that keeps us on track for the 2020 target and another year of strong free cash flow.”
We estimate that the markets in which we operate are growing around 3%. The emerging markets improved slightly compared with the fourth quarter led by South East Asia and Brazil. In India markets grew well albeit slightly slower than the fourth quarter. High inflation weighed on global market volume growth. Growth remains weak in the developed markets.
Unilever overall performance
Underlying sales growth was 3.1%, led by our emerging market business which grew 5.0%. Growth was balanced between volume and price and the pick-up in volume, compared to the fourth quarter, was helped by sustained momentum in South East Asia and North Asia.
Price growth from Argentina, which would have added 80bps to reported USG, was excluded due to its hyperinflationary status whilst the volume decline reduced group underlying sales growth by 10bps.
Turnover decreased 1.6% to €12.4 billion, driven by the disposal of spreads which we completed in July 2018.
Beauty & Personal Care
Underlying sales in our Beauty & Personal Care division grew 3.1%. Skin care and deodorants had a good start, whilst hair and skin cleansing grew modestly. Sales in oral care declined due to challenging market conditions.
Our global brands were helped by innovations including the launch of a new patented anti-perspirant technology in our Rexona Clinical Protection range and Dove foaming handwash in North America, with five times more moisturisers than the leading hand wash. Ponds and Sunsilk also grew well. A further increase in the number of local innovations is helping us to capture emerging trends better and faster than ever before, such as our St. Ives Facial Mists, an on-trend new format and Love Beauty & Planet continued to build scale.
Our acquisitions performed strongly – Dollar Shave Club rolled out a new ‘full-service model’ designed to make it easier for subscribers to add a full range of grooming products to their monthly regime and Equilibra, our nutritional supplements brand, which is not yet included in USG, positions us well to address the trend towards natural health, beauty and wellbeing.
Underlying sales in our Home Care division grew 6.0%. Fabric solutions and home and hygiene had a strong start whilst fabric sensations grew modestly. The life essentials category was flat.
Our strategic focus on premium formats in fabric solutions led to double-digit growth in liquids and capsules and we saw good performance from a new range of Domestos toilet blocks. Many of our brands benefited from the naturals trend which helped to deliver good performance for Seventh Generation, Sunlight and our new Omo EcoActive range. We will further address the trend towards naturals with our newest brand Love, Home & Planet which launched this quarter. Blueair returned to growth.
Foods & Refreshment
Underlying sales in our Foods & Refreshment division grew 1.5%. Ice cream had a strong start to the year, whilst sales in tea and savoury were flat. Dressings, which was impacted by continued high promotional intensity and the later timing of Easter, declined.
Our actions to modernise our portfolio to meet the trends towards authentic, organic and natural, healthy and on-the-go products are working, with good performance on bouillons and snack pots and encouraging early performance of a new range of Knorr protein and fibre rich soups in Turkey. Hellmann’s continued to be held back by promotional intensity particularly in the US. Challenges in developed market black tea offset good growth from Pukka, our new organic Lipton range and green tea in India.
Innovation continued to drive strong performance in ice cream helped by the roll out of the Kinder® range across Europe, while Magnum was helped by innovations such as a new white chocolate & cookie variant. Sir Kensington’s, Pukka and Weis were all up double-digits, helped by distribution gains.
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