Innovations driving growth ahead of challenging markets
Today, Unilever announced its results for the third quarter and nine months of 2015.
Third quarter highlights
- Turnover increased by 9.4% to €13.4 billion including a positive currency impact of 2.9%
- Underlying sales growth 5.7% with volume up 4.1% and price up 1.5%
- Emerging markets underlying sales growth 8.4% with volume up 4.8% and price up 3.5%
Nine months highlights
- Turnover increased by 11.1% to €40.4 billion including a positive currency impact of 7.6%
- Underlying sales growth 3.8% with volume up 2.1% and price up 1.6%
- Emerging markets underlying sales growth 6.8% with volume up 2.9% and price up 3.8%
Underlying sales growth in the third quarter improved across all divisions. Growth was however helped by some specific factors such as a soft comparator in China, strong ice cream sales and some advanced sales in Latin America.
Comment from CEO Paul Polman
Commenting on the results, Unilever CEO Paul Polman says: “The strong delivery in the third quarter shows that our focus to build our company for the long term is paying off.
“Our model of competitive, profitable, consistent and responsible growth is built on sustained investment in our brands, infrastructure and people. The sharpened strategies across the four divisions are gaining traction and a stronger innovation pipeline is increasingly driving growth. As the results show, the scale and breadth of our portfolio brings resilience in challenging economic conditions.
“We continue to see soft markets with no immediate sign of getting help from an improving global economy. We are responding fast to accelerating change and high volatility with a focus on continuous cost management while increasing our organisational agility. We will continue to invest steadily behind our brands, innovations and go-to-market capabilities.
“These actions keep us on track for another year of volume growth ahead of our markets and we now expect underlying sales growth for the year towards the upper end of the 2-4% range. We continue to expect steady improvement in core operating margin and strong cash flow.”
Consumer demand remained fragile and volume growth was barely positive in the markets in which we operate. Many emerging markets continued to be weak with currency devaluation pushing up the cost of living and squeezing disposable incomes.
Beauty & Personal Care
Beauty & Personal Care growth stepped up behind innovations that grow the core of our brands and extend into more premium segments.
Deodorants benefited from the continued success of the dry spray launch in North America and the roll-out of compressed formats into Latin America. In oral care, we continued the roll-out of Zendium, a premium toothpaste, into Central and Eastern Europe. In hair, growth was driven by the roll-out of the Dove Advanced Hair Series and the success of Lux Luminique in Japan. The improved Dove body wash formulation – which was introduced to China in this quarter – continued to perform well.
Savoury demonstrated good volume-driven growth led by cooking products in emerging markets and innovations around naturalness and health.
We launched Knorr Mealmakers with 100% natural ingredients and continued to grow the business in Africa with fortified stock cubes that address iron deficiency. In dressings, Hellmann’s showed strong volume-led growth driven by an excellent performance in Latin America and the success of our squeezy packs in Europe and North America. The Baking, Cooking & Spreads unit – which has been in place since 1 July – is repositioning the business to more attractive segments which helped us gain share in margarine, despite markets continuing to decline.
Ice cream delivered very strong growth helped by better weather than last year.
We continued to drive innovations behind premium brands such as Magnum Pink and Black and Ben & Jerry’s Cookie Core range in Europe and North America. In leaf tea, we are building our presence in faster growing segments. Lipton and PG Tips extended further into fruit, herbal and speciality teas. We opened more T2 stores which we leverage with online sales and in France we have launched T.O., our first tea brewing machine.
Home Care continued to deliver broad-based growth led by innovations in higher margin segments and by the roll out of the new Omo with enhanced formulation and improved cleaning technology.
Omo pre-treaters and stain removers have built further market share in Brazil. Fabric conditioners benefited from the success of Comfort Intense with double-encapsulated fragrance technology. In household care, we continued to scale up by extending into white spaces and rolling out improved formulations like Cif ‘Power and Shine’ sprays for kitchens and bathrooms across Europe.