Emerging markets drive sales growth by 6.3 percent in Q3 for Unilever

19 Oct 2017 --- Unilever has announced its results for the third quarter of 2017, which show emerging markets driving growth and good progress against the strategic objectives the company set out for 2020. Turnover increased by 3.1 percent in the first nine months, including a negative currency impact of 0.6 percent. Turnover decreased by 1.6 percent, including a negative currency impact of 5.1 percent. Underlying sales growth was 2.6 percent, with price up 2.4 percent and volume up 0.2 percent and emerging markets underlying sales growth was 6.3 percent in Q3, with volume up 1.8 percent. 

Commenting on the results, CEO Paul Polman says: “The transformation of Unilever into a more resilient, more competitive and more profitable business continues and we are making good progress against the strategic objectives we have set out for 2020. The ‘Connected 4 Growth’ change program is beginning to make our business less complex and more responsive to fast-changing consumer trends. The new organization is delivering increased innovation speed and our savings programmes are allowing us to step up investment behind new growth opportunities. We expect to reap the benefits over the coming quarters.”

“While conditions in our developed markets remain challenging, we are starting to see signs of improvement in some of our biggest emerging markets including India and China. Growth in the third quarter was adversely affected by poorer weather in Europe compared with last year and natural disasters in the Americas.”

“For the full year, we continue to expect underlying sales growth within the 3-5 percent range, an improvement in underlying operating margin of at least 100 basis points and strong cash flow,” adds Polman. 

Zero-based budgeting (ZBB) is improving productivity in brand and marketing investment as Unilever reduce the cost of advertising production. ZBB is also eliminating waste in those areas where the company has over-saturated traditional channels, as well as reducing low-added value costs in overheads. Plans for the integration of Foods and Refreshment into a single business are also advancing well.

Unilever is continuing to evolve their portfolio at an accelerated pace to ensure they have the platforms in place for long-term growth in attractive market segments and sales channels. In the last three months, the company announced the acquisitions of Weis ice cream in Australia, Pukka Herbs tea in the UK and Mãe Terra organic food in Brazil. The preparation for the exit from spreads via a sale or demerger is fully on track. In September, they announced the sale of their South African spreads business as part of a transaction in which the company will buy out the minority interest in Unilever South Africa.

Foods
Foods continued to modernize the portfolio while building its presence in emerging markets and sustaining a strong performance in the foodservice channels. Knorr grew strongly by responding to key needs such as naturalness and time-saving cooking products. Knorr Mealmakers with 100 percent natural ingredients has now been extended into 100 percent natural seasonings and 100 percent natural soups.

In dressings, Hellmann’s has relaunched the brand with strengthened naturalness claims in 25 markets while the organic variants have been rolled out from North America into Europe. However, sales growth was moderated by the high promotional intensity in the quarter, particularly in North America.

In spreads, new margarine with specialty oils and dairy-free variants performed well. Spreads declined 2.0 percent, a further improvement on previous quarters.

Refreshment
Refreshment grew in both ice cream and leaf tea, despite weaker volumes for ice cream in the third quarter due to poorer weather in Europe in the latter stages of the quarter and new entrant competitive activity in North America.

Innovations behind the company's premium brands continued to perform well. These included Magnum pints that deliver the ultimate chocolate and ice cream experience in a tub, as well as Magnum double raspberry and coconut variants. Unilever launched seven low-calorie, high-protein ice cream variants as Breyers delights in North America to meet the growing consumer demand for these propositions.

Leaf tea showed good growth as the company is increasingly seeing the benefits of our innovations in specialty and premium tea segments. Lipton was launched in Brazil and Argentina and is successfully extending its presence in the faster-growing green and Matcha segments, while Pure Leaf was introduced to the UK after the launch in the US.