Unilever Q1 Results Beat Expectations
16 Apr 2015 --- Unilever has posted better than forecast figures for the first quarter of this financial year, with an increase in turnover of 12.3% to €12.8 billion including a positive currency impact of 10.6% and underlying sales growth at 2.8% with emerging markets up 5.4%.
Chief Executive Paul Polman said, “We have had a good start to the year, helped by favourable currency movements but also an improvement in underlying sales. This is despite a continued challenging trading environment in many parts of the world. The actions we have been taking to put us on track for higher levels of growth are starting to pay off.
“We have further strengthened the innovation pipeline, and are increasing investment behind the core of our brands, as well as extending into premium segments and new markets. We continuously strengthen our go-to-market capabilities and sharpen our execution. Despite high levels of currency and commodity volatility, we are now starting to see more tailwinds than headwinds in our markets, and expect our initiatives to deliver a further improvement in volume growth in the remainder of the year. We remain focussed on competitive, profitable, consistent and responsible growth.
“Our priorities continue to be volume growth ahead of our markets, steady improvement in core operating margin and strong cash flow. This is our model for long-term value creation, as evidenced by today’s consistent dividend increase.”
In Europe markets remain weak, while in North America the modest price-driven pickup has been sustained. Emerging markets have seen divergent trends including some improvement in India, more stable conditions in China but a deterioration in Brazil and Russia.
Underlying sales growth was broad-based across the four categories with varying contributions from volume and price. Emerging markets grew by 5.4%, largely driven by price. In developed markets, North America again grew while in Europe volume improved strongly but pricing was down across all categories.
The company’s food division continued to be its second biggest, after Personal Care. This follows a period of selling off a number of under-performing brands that no longer fit with the company’s business model.
Good volume-driven growth included strong sales in the run up to Easter which was earlier than last year. Savoury performed well, helped by the success of cooking ingredients in emerging markets and by a good start for soups in Europe. The company is introducing more natural and healthier products such as our new bouillon cubes in Indonesia. Its biggest brand Knorr launched the ‘Flavour of Home’ campaign, which celebrates the role that flavour plays in the brand, attracting over 40 million views in the first week. Hellmann’s drove growth in dressings as it rolled out the successful squeezy packaging into North America. Spreads performance improved in the quarter, helped by the earlier Easter and good growth in emerging markets but with a continued drag from market contraction in the United States and in Europe.
The company’s Refreshment division, which includes ice creams, its major focus, gave a solid start to the year against a strong comparator. Sales were driven by innovations behind its premium ice cream brands, such as Magnum Pink and Black variants, Ben & Jerry’s Cookie core range in Europe as well as new flavours of Breyers Gelato in the United States. At the same time, the company is addressing the value segment with the rollout of the smaller-sized Cornetto variants at a recommended resale price of €1. Leaf tea growth was underpinned by the new packaging and communication of the Lipton brand. The company is building the green tea segment with new variants in India, Russia and the Middle East.
