Unilever Growth Momentum Sustained in First-Half 2013
25 July 2013 --- Unilever has released its results for the first-half 2013. Our strong innovation pipeline and focus on sustainable growth helped to drive the business forward. The company reported 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 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.”
In Food, 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.
