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Strong half-year results driven by sharp focus on operational excellence


Average read time: 8 minutes

Today, we announced our results for the first half of 2021, which show a strong performance, with underlying sales growth of 5.4% driven by our continued focus on operational excellence.

Omo Laundry machine
  • Underlying sales growth of 5.4%, with 4.0% volume and 1.3% price. Price growth stepped up in Q2
  • Turnover increased 0.3% including a positive impact of 1.4% from acquisitions net of disposals and negative impact of 6.1% from currency related items
  • Underlying operating margin of 18.8%, a decrease of 100bps driven by investment behind our brands and input cost inflation
  • Underlying earnings per share down 2.0%, including a negative impact of 6.3% from currency
  • Free cash flow of €2.4 billion, compared to €2.9 billion in the first half of 2020
  • Quarterly shareholder dividend of €0.4268 per share and share buyback programme of up to €3 billion underway

A statement from CEO Alan Jope

“Unilever has delivered a strong first half, with underlying sales growth of 5.4% driven by our continued focus on operational excellence.

We are making good progress against the strategic choices outlined earlier this year, including the development of our portfolio into high growth spaces. Prestige Beauty and Functional Nutrition grew strongly, and we recently announced the acquisition of digitally native skin care brand Paula’s Choice. The operational separation of our Tea business is substantially complete. Our ecommerce business grew 50% and the channel now represents 11% of sales.

Competitive growth is our priority, and we are confident that we will deliver underlying sales growth in 2021 well within our multi-year framework of 3-5%, despite more challenging comparators in the second half. We have seen further cost inflation emerge through the second quarter. Cost volatility and the timing of landing price actions create a higher-than-normal range of likely year end margin outcomes. We are managing this dynamically and expect to maintain underlying operating margin for 2021 around flat.”

Our markets

The operating environment across our markets has seen some improvements but remains volatile. Restrictions on daily life continue around the world, impacting channel dynamics, sales mix and consumer behaviour. Although renewed restrictions in India impacted the market in the second quarter, they were less severe than in the same period last year. In China, normalisation has continued, but market growth is still below pre-Covid-19 levels. The North America and Europe markets declined in the second quarter as we lapped the surge in demand for in-home food and hygiene products in the same period of 2020. In difficult macroeconomic conditions, markets are growing in Latin America but market conditions in South East Asia remain challenging. In Indonesia, large parts of the country have entered lock-down following a sharp rise in Covid-19 cases.

Unilever overall performance

We continue to be guided by our five strategic choices:

  • develop our portfolio into higher growth spaces
  • win with our brands as a force for good, powered by purpose and innovation
  • accelerate in the US, India and China and leverage our emerging markets strength
  • lead in the channels of the future
  • build a purpose-led, future-fit organisation and growth culture

These strategic choices and our sharp focus on operational excellence have delivered first half underlying sales growth of 5.4%, with volume growth of 4.0% and 1.3% from price. Underlying sales growth in the second quarter was 5.0%, including price of 1.6%, which accelerated through the quarter as our pricing actions landed in markets.

Emerging markets grew 8.3%, driven by continued recovery in China and strong performance in South Asia, both growing double digit. Performance in South East Asia was mixed, with Indonesia declining high single digit. Latin America grew high single digit, led by price growth. Developed markets grew 1.5%, as North America and Europe each grew low single digit. In North America, food solutions and Prestige Beauty contributed to growth as the out-of-home eating and health and beauty channels reopened. We saw a relative decline in food consumed at home and flat growth in hygiene products, as we lapped the spike in demand in the prior year. In Europe, volume growth was supported by a recovery in out-of-home ice cream. Price declined in Europe as we lapped a period of lower promotional intensity in some markets. Ecommerce grew 50% and is now 11% of sales.

Turnover increased 0.3% including a positive impact of 1.4% from acquisitions net of disposals and negative impact of 6.1% from currency related items.

We continue to develop our portfolio into higher growth spaces. In Prestige Beauty, we signed an agreement in June to acquire the leading digital-led skin care brand Paula’s Choice, which has pioneered jargon-free science, high performing ingredients and cruelty-free products. Underlying sales in functional nutrition grew high single digit in the second quarter, which includes vitamins, minerals and supplements brands OLLY and Equilibra and our South Asian nutrition brands Horlicks and Boost.

The operational separation of our tea business is substantially complete and is due to conclude in October 2021. We are now focused on the next phase for this business, which we expect to be either an IPO, sale or partnership. This business generated revenues of around €2 billion in 2020 and excludes our hot tea businesses in India and Indonesia and our partnership interests in ready-to-drink tea.

As we announced in April, a number of smaller beauty and personal care brands have been separated with a dedicated management team under the name Elida Beauty. The brands include Q-Tips, Caress, Tigi, Timotei, Impulse and Monsavon with combined revenues of around €0.6 billion in 2020. We are exploring options for these brands with a focus on maximising value creation.

Underlying operating margin declined by 100bps to 18.8%. After conserving spend at the peak of the global pandemic in the prior year, we have stepped up investment in our brands and marketing campaigns, increasing spend by 80bps. Gross margin was 60bps lower, impacted by an increase in raw material, packaging and distribution costs globally. There was a slightly negative incremental impact on gross margin in the first half from adverse mix related to Covid-19. Overheads improved by 40bps. Productivity programmes and ongoing Covid-19 related savings in areas like travel and facilities continued.

Beauty & Personal Care

Beauty & Personal Care underlying sales grew 3.3% with 1.8% from volume and 1.4% from price, with an acceleration to 4.2% underlying sales growth in the second quarter, helped by increased personal care consumption occasions as living restrictions were eased in some of our markets.

Skin care grew double digit and deodorants returned to growth. In skin care, Vaseline and Ponds each grew double digit. We launched Dove’s refillable deodorant innovation in the US, one of many Dove projects exploring sustainable packaging solutions. Skin cleansing declined as we lapped the sharp increase in demand in the prior year related to Covid-19. Hair grew mid-single digit. Wash and care and styling both grew, and we saw good growth in China, India and Brazil. Premium brand Shea Moisture grew double digit in the US.

Oral care grew mid-single digit, led by volume from South Asia and Africa. Closeup’s freshness innovation is driving growth in Brazil. Our Prestige Beauty brands grew double digit, with higher in-store footfall. We increased pricing in response to commodity inflation across categories, particularly in Latin America and South Asia.

Home Care

Home Care underlying sales grew 4.5% with 4.8% from volume and negative price of 0.3%.

Fabric cleaning grew mid-single digit driven by recovery in India and price-led growth in Brazil. In Latin America, growth was helped by our Omo dilutable laundry liquid innovation, which launched in 2020. Fabric enhancers grew mid-single digit led by China, where our Comfort fragrance boosters innovation with dual-colour beads and luxury-inspired fragrances performed well. Home & hygiene declined low single digit. There was good growth in dishwash in emerging markets, while household cleaners declined as we lapped a prior year spike in growth. We expanded our Lifebuoy brand into home hygiene products in the UK and Germany, launching the new BotaniTech range of cleaning products with naturally derived ingredients.

Price declined overall as we lapped a period of lower promotional intensity in some markets and as the impact of rising input costs was more muted in fabric cleaning through the first half. Pricing was slightly positive in the second quarter as we started to take pricing action in markets including Brazil and Turkey to respond to rising input costs.

Foods & Refreshment

Foods & Refreshment underlying sales grew 8.1% with 5.8% from volume and 2.1% from price.

Ice cream sales grew across both in-home and out-of-home products, with double digit performances in Turkey, China and India. Out-of-home ice cream in Europe grew double digit as living restrictions began to ease, although sales have not returned to pre-Covid-19 levels. Magnum and Ben & Jerry’s both grew double digit. Magnum launched the Miley in Layers campaign with Miley Cyrus. Ben & Jerry’s has seen innovation success with its ‘Topped’ product range, with larger chunks and unique patterns and layers.

Food solutions grew double digit. Sales in China were above pre-Covid-19 levels, however in most other markets, turnover has not yet recovered to 2019 levels as out-of-home channel restrictions remained in place. In-home foods grew low single digit even as we lapped a spike in demand in the prior year. Knorr and Hellmann’s grew double digit led by volume with campaigns such as Make Taste Not Waste by Hellmann’s and the rollout off innovations such as Knorr’s flavour rich, low salt bouillon. We took pricing action across food and ice cream to counter rising input costs.

Tea grew high single digit through both price and volume, with growth in North America, Turkey, Europe and India. Price was driven by India, following significant raw material inflation.

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