A good quarter against strong comparators
Today, we announced our results for the third quarter of 2021 with underlying sales growth of 2.5%. The combination of our strategic choices and focus on operational excellence continue to drive competitive growth. Underlying sales growth is now at 4.4% for the year to date and we are confident that we will be well within our multi-year framework of 3–5% for the full year.
- Underlying sales growth of 2.5%, with 4.1% price and (1.5)% volume
- Turnover increased 4.0%, including 1.6% from acquisitions net of disposals and (0.1)% from currency
- Quarterly shareholder dividend of €0.4268 per share, ongoing share buyback programme of €3 billion to be completed by the end of the year
Statement from CEO Alan Jope
“We have delivered a good quarter against strong comparators, with underlying sales growth of 2.5%. The combination of our strategic choices and focus on operational excellence continue to drive competitive growth. Underlying sales growth is now at 4.4% for the year to date and we are confident that we will be well within our multi-year framework of 3–5% for the full year.
“Our strategic choices are having a positive impact on our growth and business momentum:
- Priority markets: we have delivered good growth across our three priority markets of the US, China and India. South East Asia continues to be impacted by Covid-19, and was the main source of volume decline in the quarter
- Channel: e-commerce grew 38% and is now 12% of our sales
- Portfolio: our high-growth new businesses, Prestige Beauty and Functional Nutrition, each grew double digit and we completed the acquisition of digitally-native skin care brand Paula’s Choice
- Brands and innovation: our focus on impactful innovation has led to a step up on measured product superiority and average innovation project size
- Organisation and culture: our organisational agility has allowed us to take rapid pricing actions in response to unprecedented cost inflation
“Cost inflation remains at strongly elevated levels, and this will continue into next year. We have and will continue to respond across our categories and markets, taking appropriate pricing action and implementing a range of productivity measures to offset increased costs. We continue to expect that we will deliver in line with our margin guidance of around flat for the full year.”
The operating environment across our markets remains volatile, and restrictions on daily life continue around the world to varying degrees, impacting channel dynamics, sales mix and consumer behaviour.
In India as Covid-19 cases reduced and restrictions eased the operating environment improved. In China normalisation has continued, however overall, the market remains below pre-Covid-19 levels. Markets are growing in Latin America, driven by price.
North America and Europe markets declined against a high base in the prior year driven by demand for in-home food and hygiene products. Conditions across South East Asia continue to be challenging, with the quarter impacted by lockdown restrictions in the region.
Unilever overall performance
Underlying sales growth was 2.5% with price of 4.1%, which is a step up from the first half of the year as we take pricing action to offset rising commodity and other input costs.
Our three priority markets of the US, India and China each grew strongly. In the US our food solutions, functional nutrition and Prestige Beauty businesses all contributed to growth, whilst in-home food and ice cream declined. We are continuing to see a trend of increased eating away from home and greater offline shopping. China grew high single digit led by volume with broad based growth across divisions. India grew double digit as the country continued to recover from Covid-19 related impacts.
Latin America grew high single digit with strong price and a small decline on volume. Price increases have been taken in response to rising input costs. South East Asian markets were significantly impacted by rising Covid-19 cases and related restrictions, and were the main source of overall volume decline. Europe grew, with price of 2.1%, although volume declined partly due to a strong prior year comparator in Home Care. E-commerce grew 38% and is now 12% of our sales.
Prestige Beauty and functional nutrition are delivering good growth. Underlying sales in functional nutrition grew double digit in the third quarter with vitamins, minerals and supplements brand OLLY, growing strongly. Prestige Beauty had a strong quarter growing double digit with the return to stores continuing.
Turnover increased 4.0%. There was a positive impact of 1.6% from acquisitions net of disposals and a negative impact of 0.1% from currency-related items.
We completed the operational separation of our tea business on 1 October 2021. We are focused on the next stage for this business which is expected to be either an IPO, sale or partnership.
Beauty & Personal Care
Beauty & Personal Care underlying sales grew 2.6%, with negative 1.3% from volume and 3.9% from price.
Skin care grew high single digit, with double digit growth from our Vaseline brand, and deodorants grew mid-single digit. While skin cleansing saw a step up in pricing, underlying sales declined overall as we lapped significantly increased demand in the prior year related to Covid-19. Hair care grew low single digit, with mid-single digit price growth and negative volumes. Our Dove hair therapy innovation in North America, which applies state-of-the-art skin care ingredients to hair, continued to perform well.
Oral care declined amidst challenging market conditions in South East Asia. Our Prestige Beauty brands grew double digit and vegan brand Hourglass launched its new customisable, refillable Curator eyeshadow palettes. We increased pricing in response to commodity inflation across categories and regions.
Home Care underlying sales grew 1.4%, with negative 3.2% from volume and 4.8% from price.
Within fabric care, fabric cleaning grew low-single digit, with mid-single digit underlying price growth and negative volumes. Growth was driven by South Asia and strong price action in Latin America. Volume declined in Europe due to a strong prior year comparator, and in South East Asia as Covid-19 restrictions were imposed.
In Brazil growth was supported by the rollout of our “tougher on stains, kinder to the planet” plant-based innovation under the OMO brand. Low-single digit growth in fabric enhancers was driven by ongoing market development in South Asia and our Comfort fragrance boosters continued to perform well in China. We lapped high demand for household cleaners during the prior year resulting in high single digit decline in home and hygiene, although we continue to trade ahead of pre-pandemic levels. We took pricing action across the portfolio in response to commodity inflation, particularly in Latin America, South Asia and Turkey.
Foods & Refreshment
Foods & Refreshment underlying sales grew 3.0%, with negative 0.8% from volume and 3.8% from price.
Out of home ice cream grew with Asia and Europe both growing well as countries re-opened, although ongoing travel restrictions and poor weather in Europe means turnover has not yet recovered to 2019 levels. In-home ice cream declined as we lapped very strong growth in the prior period. Cornetto grew double digit supported by the launch of Cornetto Rose, the first ever rose shaped creamy ice cream.
Food solutions grew double digit with China and markets across Europe and Latin America delivering sales above 2019 levels. Consumer demand for in-home food remained strong, although sales in the third quarter were slightly down as we lapped a strong prior period of growth. Knorr and Hellmann’s both grew mid-single digit supported by superior product performance and investments in sustainable packaging.
We have continued to take pricing action across foods and ice cream in response to commodity inflation.
Tea grew slightly led by pricing in India and Turkey.
Where relevant, these actions are subject to the appropriate consultations and approvals.
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