Unilever growth momentum sustained in first-half 2013
On the 25th July, we released our results for the first-half 2013. Our strong innovation pipeline and focus on sustainable growth helped to drive the business forward.
Underlying sales growth 5.0% with emerging markets up 10.3%
Underlying volume growth 2.6% and pricing up 2.3%
Turnover up 0.4% at €25.5 billion with currency (3.2)% and disposals (1.1)%
Core operating margin up 40bps to 14.0% driven by gross margin up 120bps
Core earnings per share up 4% to €0.76; free cash flow of €1.3 billion
Hindustan Unilever stake increased to 67%
Second quarter highlights
Underlying sales growth 5.0% with volume growth of 3.0% and price growth of 2.0%
Unilever delivered another quarter of solid growth, led by emerging markets which continued to grow at 10.3% with a good balance between volume and price. Developed markets declined by (1.3)% in the quarter, with both negative price and volume.
All categories grew globally with strong growth from Home Care and Beauty & Personal Care. Gross margin increased by 120bps to 41.0% at constant exchange rates, primarily due to the mix benefit of higher margin products and continued discipline around savings programmes. Core operating margin, up 40bps at 14.0%, reflected higher advertising and promotions investment behind our brands.
Commenting on the results, CEO Paul Polman said: “This set of results clearly demonstrates that the transformation of Unilever to a sustainable growth company is fully on track. Our innovation pipeline is robust which will be vital as we navigate the slowdown in many parts of the world. Our focus on gross margin is also starting to bear fruit: we are delivering more profitable innovations, improving mix and continuing to apply a rigorous approach to supply chain costs and savings.”
Looking forward, he adds: “We remain focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow.”
Beauty & Personal Care
Hair performed well despite highly competitive markets. Dove benefited from the roll-out of Dove Repair Expertise and Men+Care hair. TRESemmé also delivered broad-based growth, underpinned by the Keratin Smooth range and good progress in new markets. Sunsilk grew on the back of the successful essential oils variant in Indonesia and a new conditioners range in Turkey. Clear continued to make good progress.
Skin cleansing continued to deliver robust growth reflecting the success of the improved Dove Nutrium Moisture shower range and Dove Men+Care. Vaseline growth accelerated, helped by the successful launch of the Spray & Go moisturiser. Pond’s Flawless White BB is being rolled out to new markets after the successful launch in Thailand and Pond’s Men has been rolled out to Indonesia.
Deodorants growth was driven by the continuing success of compressed deodorants, Axe Apollo and the Rexona ‘Do More’ campaign. Oral care performed well despite increased competitive intensity with the roll-out of the Expert Protection range to Zhong Hua in China and good momentum behind Pepsodent 1-2-3.
Core operating margin in the first half was up 20bps, driven by higher gross margin.
Foods & Refreshment
Savoury growth accelerated as Knorr benefited from the continuing success of jelly bouillons, now extended to a meal maker range introduced in Russia, and baking bags which are doing particularly well in Latin America. Knorr also performed well in North America with the successful ‘what’s for dinner tonight’ campaign driving growth in Canada. We continue to build consumption in emerging markets, for example in Nigeria where we see the benefit of improvements we have made to the product quality of our powdered bouillons.
Dressings continued to deliver consistent growth with the notable success of the Hellmann’s 100th birthday celebrations and the Hellmann’s Real Whipped variant in the US. Spreads performance improved versus the first quarter but lower sales reflected the underlying weakness of the market and high levels of competitor pricing activity. We continue to introduce better tasting products and the Becel Gold variant is progressing in line with expectations.
Core operating margin was down 30bps with higher gross margin offset by increased advertising and promotions.
Growth in leaf tea continued to improve with the Lipton brand delivering strong growth in the Middle East and Turkey helped by the introduction of the new better-tasting Lipton Yellow label. The Brooke Bond Red Label relaunch highlighting the health benefits of tea performed well in South Asia. The AdeS soy drink brand is now recovering after the negative impact of a product recall.
Ice cream grew globally despite poor weather in Europe and the US, reflecting the fact that we are no longer so dependent on the European summer. Magnum innovations such as Magnum Pink and Black, ‘5 kisses’ and the new pints format in Europe are doing well. Cornetto has been relaunched in China and Europe and Ben & Jerry’s growth was driven by new flavours such as Peanut Butter Me Up.
Core operating margin was up 90bps with higher gross margins underpinned by improved mix and cost savings.
Laundry delivered double-digit growth in the quarter driven by a strong innovation programme. Our premium laundry liquid technology was launched in India and Sri Lanka and Omo with wash boosters, giving outstanding cleaning even on a quick wash, was rolled out to Turkey and Vietnam. Omo with a touch of Comfort was launched in China whilst Comfort anti-bacterial was launched in Thailand.
In household care we also saw double-digit growth which included the launch of Cif and Domestos in Brazil during the quarter. In dishwash, a Sunlight anti-bacterial range was launched in India and Indonesia and a Svelto eco refill pack was launched in Italy, providing environmental benefits and attracting more users through a more affordable format.
Core operating margin was up 170bps with stronger gross margins partly offset by higher advertising and promotions.
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