Unilever reports better-than-expected Q4 growth, buys leading Romanian ice cream maker

01 Feb 2018

01 Feb 2018 --- Unilever has reported better-than-expected growth in the fourth-quarter underlying sales driven by a step-up in emerging markets as its restructuring program continues to yield results. The maker of Marmite and Ben & Jerry's ice cream said its underlying sales rose by 4.0 percent in the final quarter of 2017, an improvement from growth of 3.0 percent in the first half and 2.6 percent in the third quarter, and above the company-supplied consensus forecasts of 3.7 percent.

The company saw full-year underlying sales growth, excluding its Spreads business which is being sold, of 3.5 percent. In December last year, Unilever received a binding offer from KKR to purchase its global Spreads business for €6.825 billion on a cash-free, debt-free basis. You can read FoodIngredientsFirst coverage on this here.

The firm’s full-year net profit increased by 16.9 percent to €6.5bn, with underlying earnings per share up by 10.7 percent to €2.24. Unilever’s underlying operating margin rose by 110 basis points reflecting “strong savings delivery.”

Commenting on the results, Unilever CEO Paul Polman said: “We have delivered a good all-around performance with competitive growth, including an innovation-led improvement in volumes in the fourth quarter, and substantially increased margin, earnings and cash flow. This puts us well on track to deliver towards the strategic objectives set out for 2020 and demonstrates the progress we have made in transforming Unilever into a more resilient and agile business.”

“2017 has once more been a year of major change for Unilever with the acceleration of the ‘Connected 4 Growth’ program, which we announced in 2016. With the implementation of a more agile, consumer-facing organization, we are seeing quality and speed of innovation further improves.”

“Our priorities for 2018 are to grow volumes ahead of our markets, maintain strong delivery from our savings program and complete the integration of Foods & Refreshment, as well as the exit from spreads. We expect that this will tr

anslate into another year of underlying sales growth in the 3-5 percent range, and an improvement in underlying operating margin and cash flow, that keeps us on track for the 2020 targets,” Polam notes.

Elsewhere in the business, Unilever announced that it has signed an agreement to acquire the business of Betty Ice SRL, a Romanian ice-cream producer. This partnership aims to further expand the brand by combining the strengths of the Unilever group with local ice-cream market expertise and know-how. The value of the transaction has not yet been disclosed and the agreement is subject to regulatory approval by the Romanian competition authorities. When approached by FoodIngredientsFirst, Unilever had no further comments on the move as part of their strategy.

Unilever’s South Central Europe Ice Cream division and Betty Ice will operate as a standalone unit within Unilever and will be led by Vasile Armenean, General Manager for Betty Ice.

Betty Ice is the main local ice cream producer in Romania, with a total turnover of €30 million (US$37.3 million). The company owns one factory in Suceava and has more than 180 ice cream kiosks open during summer time. Betty Ice employs 760 employees in Romania.

James Simmons, Managing Director Unilever South Central Europe, said: “We are delighted that Betty Ice will join the Unilever family. Betty Ice is a wonderful business, much loved by Romanians. I am also very pleased that Vasile Armenean has decided to join our company. He is an outstanding entrepreneur and he will play an instrumental role in creating a bright future for this new business.”

Armenean added: “In 23 years we have grown a great business in Romania, and we are proud that Betty Ice, the number 1 Romanian ice cream brand, will join the portfolio of the number 1 ice cream producer in the world. Our legacy and Unilever’s vision are a perfect match for the future of Betty Ice brand.”

By Elizabeth Green