Consistent, Competitive Growth in Challenging Markets for Unilever

Commenting on the results, CEO Paul Polman says: “The first quarter demonstrates a strong volume-driven performance, following on from a good delivery in 2015. We are maintaining momentum despite a tougher external environment, with all four categories gaining market share. This broad-based growth, including 8% in emerging markets, shows the validity of our strategy, active portfolio management and a step-up in innovation.

 

“With markets remaining volatile, we continue to focus on driving agility and resilience in our business through the key programs which we set out at the end of last year: net revenue management, zero based budgeting and the next stage in our continued organizational transformation. This will position us well to deliver another year of volume-driven growth ahead of our markets, steady improvement in core operating margin and strong cash flow. These underpin sustained long-term value creation for our shareholders.”

 

Our markets
Consumer demand remained fragile. Volume growth slowed further in the markets in which Unilever operate, with market growth weak in emerging markets, negligible in North America and negative in Europe.

 

Overall performance
Underlying sales growth in the first quarter was driven by market share gains across all four categories. Emerging markets grew by 8.3% with an increased contribution from volume. There was strong underlying price growth in Latin America and virtually no pricing in Asia. Developed markets declined by 0.3% with volume growth offset by widespread price deflation in Europe.

 

Foods
Good growth in savory was led by cooking products in emerging markets and by innovations around naturalness such as Knorr Mealmakers with 100% natural ingredients in Europe. Hellmann’s drove strong growth in dressings driven by a new ‘Real’ campaign, the success of the convenient squeeze packaging with proprietary easy-out technology, and the launch of Carefully Crafted and Organic variants.

 

The Baking, Cooking & Spreads unit repositioned Flora in the UK with a campaign that highlights its plant-based health credentials and introduces a dairy-free variant. Sales in spreads declined as a result of the continued market contraction in developed countries.
 
Refreshment
Ice cream continued its strong momentum of the last two years driven by margin-accretive innovations behind premium brands such as the new Magnum Double range, the Ben & Jerry’s Wich cookie-dough sandwich and premium desserts under Breyer’s Gelato and Carte D’Or Sorbet. Unilever are addressing the value segment with a new yoghurt variant of the smaller-sized Cornetto at a recommended resale price of €1.

 

In leaf tea, Unilever are accelerating the move towards more premium products with T2 and machine-compatible tea capsules. Lipton and PG Tips are continuing to extend their presence in the faster-growing green, herbal and speciality teas segments.