Unilever Results: Strong Start to 2014 Driven by Core Brands and Emerging Markets
24 Apr 2014 --- Unilever has reported a good start to 2014, with an increase in sales of 3.6% for the first quarter of the year, driven by strong growth in Home Care, Personal Care and its ice cream sectors. In its results statement today the company also reported strong growth from emerging markets at 6.6%.
“We delivered good growth in the first quarter despite slowing markets and a tough competitive environment, further evidence that Unilever is now delivering consistently ahead of our markets. We saw a continuation of the competitive performances in Home Care and Personal Care and a strong start to the year in Refreshment,” said chief executive officer Paul Polman.
Polman explained that the decline in Foods was largely explained by the later timing of Easter. “I am confident that we are now taking the right actions to improve performance,” he said. “We are now gaining market share in margarines in Europe and North America in response to our investment in communicating the improved taste and naturalness of our brands.
In its Foods portfolio the company noted that despite the successful launches of brands such as Rama with Butter in Germany, the decline of the margarine market remained a drag on its spreads growth. However, it is now gaining market share in margarine in both Europe and North America. It also noted that Knorr cooking products did well and the successful jelly format was extended into seasonings through the introduction of Knorr Flavour Pots in the UK. Dressings performance was stable as Hellmann’s lapped the 100 year anniversary in the United States.
Strong growth in Refreshment was driven by ice cream in Brazil and Australia coupled with a very good start to the ice cream season in Europe. The ice cream innovation programme for 2014 includes products celebrating Magnum’s 25th birthday, Klondike Kandy bars and Breyers Gelato in the United States, a new Carte D’Or Artisanal range in Europe and Cornetto with double topping and new flavours in China.
Tea growth accelerated in the United States, helped by the success of Lipton K-Cups®. We also saw good growth in the United Kingdom as PG Tips launched a range of fruit, herbal and green teas. Elsewhere we saw good growth in South Asia, Egypt and Arabia but weaker sales in Russia and Poland. The decline of AdeS soy drinks reduced as we reached the anniversary of the product recall last year.
Personal Care grew ahead of their markets driven by a strong innovation programme. Deodorants performed well with the successful compressed aerosol format extended to new markets in Europe and the launch of the premium Advanced Care range for Dove in the United States. In skin, the performance of Lux has stepped up, underpinned by a major relaunch in China and South East Asia. Dove Nutrium Moisture shower gels also continued to drive growth across our markets. Vaseline Spray & Go made good progress in existing markets and was extended to Australia.
In Hair, the Dove Advanced Hair Series was launched in the United States and TRESemmé 7 Day Smooth, which offers salon-smooth hair for up to three washes, was introduced in the United Kingdom and the United States. We also launched dry shampoos under the Elidor brand in Turkey. Capitalising on the growth of male Personal Care products, in oral we launched Signal White Now Men, our first toothpaste specifically designed for men.
Underlying sales growth in Home Care was broad-based and volume-led, with a significant impact from new product launches. In laundry, the new concentrated Small & Mighty liquid detergents with improved formulation and innovative packaging are now present in seven markets and a new ‘Eco’ refill pack has been introduced. In France we launched Skip multi-action capsules, combining both liquid and powder technology in a single unit dose format to provide enhanced stain removal. Comfort Aromatherapy super-sensorials was extended into South Africa and Turkey.
Household cleaning growth outpaced the market. During the quarter we launched Cif direct application floor cleaner in Europe and Sun Ultimate, our best ever all-in-one dishwash tablets, in France. After successfully launching Domestos Turbo Fresh rotating rim blocks last year, we rolled them out to new countries in Europe. We saw continued good momentum from the recently launched Domestos and Cif in Brazil.
“AAR growth was ahead of our markets and we saw strong performances in China, Turkey and Indonesia and a marked improvement in Japan. Russia was weak reflecting the soft market conditions but our Personal Care brands continued to grow ahead of the market. South Africa grew despite weak markets and intense competition. We completed the acquisition of a majority stake in the Qinyuan global water purification business, our biggest acquisition in China for more than ten years, more than doubling the size of our water purification business. This represents an important step towards the Unilever Sustainable Living Plan goal to make safe drinking water available and affordable to people across the world.”
“Europe was broadly stable in the first quarter, a good performance given the sluggish markets. Broad-based growth in ice cream, Personal Care and Home Care was largely offset by a decline in Foods. The key markets of United Kingdom and Germany grew ahead of their respective markets. A return to growth in Greece and Spain underlines the improving conditions in southern Europe. We completed the disposal of the Bifi and Peperami brands during the quarter.”
The company said it remains focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvements and strong cash flow.
