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First quarter results: operational excellence is delivering improved competitiveness


Average read time: 7 minutes

Today, Unilever announced its results for the first quarter of 2021. Underlying sales are up 5.7%, reflecting how our continued focus on operational excellence is delivering improved competitiveness.

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  • Underlying sales growth of 5.7%, with 4.7% volume and 1.0% price
  • Turnover decreased by 0.9%, driven by a negative currency related impact of 8.0%
  • Quarterly shareholder dividend of €0.4268 per share and share buyback programme of up to €3 billion to commence in May

Comment from CEO Alan Jope

“Unilever has made a good start to the year. Our focus on operational excellence, innovation and purposeful brands is continuing to strengthen competitiveness and has delivered underlying sales growth of 5.7% for the quarter.

“We are driving the evolution of our portfolio, with strong growth in Prestige Beauty and Functional Nutrition. The operational separation of our Tea business is on track. We are also making good progress in creating a new unit, Elida Beauty, comprising a number of our smaller beauty and personal care brands.

“We are confident that we will deliver underlying sales growth in 2021 within our multi-year framework of 3-5%, with the first half around the top of this range. We expect to increase underlying operating margin slightly for the full year, though with a decline in the first half driven by Covid-19 impacts, higher cost inflation and increased marketing spend over the prior year. Following another year of strong cash flow delivery, Unilever’s Board has approved a share buyback programme of up to €3 billion.

“We are committed to delivering superior long-term financial performance through our sustainable business model, which we believe has never been more relevant than it is today.”

Our markets

The operating environment remains volatile across our broad geographic footprint. Fluctuating Covid-19 case levels and markets entering and exiting lock-downs continue to impact consumer behaviour and channel dynamics. In North America and Europe, strong demand for in-home food has continued, while demand for most beauty and personal care categories has remained subdued.

Conditions in China are normalising. Economic activity in India increased in the first quarter, although parts of the country have recently returned to lock-down as a result of sharply rising Covid-19 cases. Markets grew in Latin America in the first quarter, despite macroeconomic conditions remaining volatile, and market conditions in South East Asia remain challenging.

Unilever overall performance and outlook

We continued to focus on operational excellence, which is delivering improved competitiveness. Underlying sales growth was 5.7% with 4.7% from volume and 1.0% from price.

Emerging markets grew 9.4% driven by strong double-digit growth in China and India, following strict lock-downs in the prior year. Latin America grew high-single digit while South East Asia declined, driven by Indonesia. Developed markets grew 0.8%, with mid-single digit growth in North America offset by a decline in Europe, where volumes were impacted by lock-downs and we began to lap higher demand for food and hygiene products. E-commerce continued to perform strongly, with underlying sales growth of 66%, and represented 11% of turnover.

Turnover decreased 0.9%. There was a negative impact of 8.0% from currency related items. Acquisitions net of disposals, including acquired functional nutrition brands Horlicks, Liquid I.V. and SmartyPants Vitamins, had a positive impact of 1.9%.

In 2021 we expect to deliver underlying sales growth within our multi-year framework of 3-5%, with the first half at around the top of this range. We expect underlying operating margin to increase slightly in the full year, following a decline in the first half which is driven by a number of factors. Covid-19 continues to cause additional supply chain costs and a negative margin mix. Commodity and freight costs have increased further and we will be lapping lower marketing spend in the first half of last year.

We will commence a share buyback programme of up to €3 billion in May, in one or more tranches, to be completed by the end of the year. This reflects our strong cash flow delivery and balance sheet position, and is in line with our capital allocation framework. A further announcement will be provided before trading begins.

The operational separation of Unilever’s Tea business – excluding India and Indonesia and the partnership interests in the ready-to-drink tea joint ventures – is progressing well and is expected to complete this year. We continue to evaluate the most value creating model, including an IPO, a demerger, a joint venture or a disposal, and we have also appointed an external CEO to lead this business into its next phase. The business that will be separated generated revenues of around €2 billion in 2020.

The separation of a number of smaller beauty and personal care brands is also underway. These brands, which are predominantly sold in Europe and North America, will operate under the name Elida Beauty and will benefit from dedicated management focus. The brands include Q-Tips, Caress, TIGI, Timotei, Impulse and Monsavon, and together generated revenues of around €0.6 billion in 2020.

Beauty & Personal Care

Beauty & Personal Care underlying sales grew 2.3%, with 1.5% from volume and 0.8% from pricing.

Skin cleansing grew mid-single digit, with growth in the first two months followed by a decline in March as we started lapping a sharp increase in demand for hygiene products. We rolled out Dove’s Care & Protect innovation across the Americas, Europe and India, with new technology bringing together hygiene and long lasting moisturisation across formats.

Skin care and hair care both grew mid-single digit. In hair, wash & care growth was driven by strong performance in China and India, which was partly offset by a decline in styling, as restricted living continued to weigh on usage occasions.

Deodorants declined high-single digit as the deodorants market was also impacted by lower consumer usage.

Our Prestige business grew strong double digit, helped by the gradual restocking and reopening of brick and mortar stores in the US. Our Hourglass brand launched a 100% vegan red lipstick formulated with a patent-pending pigment replacing the industry standard, which is produced from crushed beetles.

Home Care

Home Care underlying sales grew 5.9%, with 6.5% from volume and negative price of 0.6%.

Fabric cleaning and fabric enhancing grew mid-single digit, led by recovery in India as consumers returned to offices and schools. We continued the rollout of our new ‘tougher on stains, kinder to the planet’ plant-based innovation under the Omo brand.

Home & hygiene grew mid-single digit as demand for surface cleaners remained elevated, albeit declining in March as we started lapping high growth at the start of the pandemic in 2020. We expanded the rollout of our Domestos multi-surface germ kill innovation, launching new formats into India, Turkey and the UK.

Price declined after we passed on the benefits of lower commodity costs in the second half of 2020, and due to promotional activity in Europe.

Foods & Refreshment

Foods & Refreshment underlying sales grew 9.8%, with 7.3% from volume and 2.3% from pricing.

Out-of-home ice cream returned to growth, with strong performance in emerging markets offsetting declines in Europe due to ongoing lock-down restrictions which have impacted the buy-in for the summer season. In-home ice cream grew double digit as demand for food consumed at home remained high. The Magnum brand launched its new Double Gold Caramel Billionaire innovation in stick and pint formats. Tea saw volume and price growth.

Despite in-home foods seeing a decline in March, as we lapped a spike in demand in the prior year, sales in the quarter were up mid-single digit as consumers continued to eat more at home due to restricted living conditions. The food solutions business grew low single digit, with growth in China offsetting declines in markets impacted by channel closures. Our Hellmann’s brand grew double digit and communicated its purpose to fight food waste with the brand’s first ever advert during the US Super Bowl.

Price growth of 2.3% was led by tea, as we increased prices in India in response to significant commodity inflation. In addition, we took strong pricing action in foods and ice cream in Latin America, following high inflation and currency devaluation.

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