Unilever Reports 15% Rise in Q4 Profits
In the fourth quarter underlying volume growth was 5.1%, with underlying sales growth of 5.1% with underlying price growth flat; positive in-quarter pricing. The company posted a 15% rise in fourth-quarter profit and a 12% rise in sales.
2/3/2011 --- Unilever has reported that turnover was up 11.1% at €44.3 billion in 2010, with 7.3% due to currency. There was underlying volume growth of 5.8% with underlying sales growth of 4.1% and underlying price growth (1.6)%. In quarter pricing was flat for first nine months, positive in the fourth quarter.
In the fourth quarter underlying volume growth was 5.1%, with underlying sales growth of 5.1% with underlying price growth flat; positive in-quarter pricing. The company posted a 15% rise in fourth-quarter profit and a 12% rise in sales, driven by volume gains in emerging markets, but cautioned that commodity prices are putting pressure on its margins.
2010 results were strong despite intense competition, weak consumer confidence in many markets and the impact of rising commodities costs in the second half. Whilst markets showed little or no growth in the developed economies, emerging market growth remained healthy. We grew our volumes ahead of the market in all regions and finished the year strongly despite a strong prior year comparator. Whilst in-quarter pricing was flat throughout much of the year, it became positive in the fourth quarter as the company responded to increasing commodity costs. Savings programmes delivered strongly across both supply chain and indirects. Unilever invested in its product quality and significantly increased the investment behind our brands while improving advertising quality. In the fourth quarter, advertising and promotions was lower by 170bps reflecting the phasing of activities and some rebalancing between above and below the line support in developed markets.
In the food division, savoury growth accelerated in the quarter, with strong volumes, positive price and impactful innovations. Knorr jelly bouillon helped to drive growth across many markets in Europe and Latin America whilst a new gourmet soups range drove strong share growth in France. Knorr soupy noodles continue to grow in India and soups have been launched in Bangladesh. The Knorr Season and Shake baking bags have now been launched in more than 20 markets with good initial results. PF Chang’s restaurant quality frozen meals have been a great success, exceeding €50m turnover in the launch year.
Dressings grew both volume and price in the quarter driven by a successful campaign to increase the consumption occasions of mayonnaise in Latin America and the launch of a range of flavoured mayonnaises in Europe. Spreads grew both volume and price in the quarter by investing in improved product quality and communicating the new taste benefits; a strong performance given the weak markets. Pro.Activ spreads again delivered strong growth by emphasising its core heart health benefits and Pro.Activ Buttery was launched successfully in Europe.
Ice cream delivered another good quarter of growth with a strong contribution from Western Europe, Asia and Russia. Magnum was launched in Indonesia and Klondike continued to grow in the US driven by improved product quality and a strong TV and digital marketing campaign which increased consumer interaction with the brand. Tea continued the momentum in the quarter delivering strong volume and solid price growth to achieve high single digit sales growth. Tea grew particularly well in India, UK, Turkey, Saudi Arabia and China driven by the strength of the Lipton brand equity, up-trading to new formats such as green tea in pyramid bags, the development of milk teas in China and the conversion from loose tea to tea-bags across emerging markets. Ades soy-based drinks continued to make progress in Latin America with impactful new packaging and advertising.
Chief Eecutive Officer
“We are pleased with another year of good results in which we delivered against all our key priorities and further progressed the transformation of Unilever. We delivered strong volume growth, particularly in emerging markets which continued to be the engine of growth. We gained volume share in all regions driven by stronger innovations, significant increases in marketing investment and the extension of our brands into new territories. At the same time we delivered margin improvement through a strong savings programme, lower indirects and volume efficiencies. This, coupled with excellent working capital management, enabled us to deliver robust cash flow. The Unilever of today is more agile and confident, now fully fit to compete. We remain focused on serving our consumers and customers and building the long term health of our brands. Despite the intense competition and the return of commodity cost volatility, our objectives remain: profitable volume growth ahead of our markets, steady and sustainable underlying operating margin improvement and strong cash flow,” the company’s CEO, Paul Polman stated.
The acquisition of Sara Lee’s personal care business and the disposal of the Italian frozen foods business were completed during the fourth quarter. The proposed acquisition of Alberto Culver has received shareholder approval and now awaits approval of the relevant regulatory authorities. The previously announced disposal of the Brazilian tomato business is expected to be finalised early in 2011.
