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MARKETING

Volume drives Unilever performance; innovations in tea steam India growth
Tuesday, 24 April, 2018, 08 : 00 AM [IST]
London
Multinational company with interests in many businesses Unilever recently announced its results for the first quarter of 2018, which show good volume-driven performance across its three divisions.

The highlights include Underlying Sales Growth (USG) excluding spreads was 3.7% with an encouraging shift to volume-led growth compared to the prior year. Across all divisions, this was driven by strong innovation and market development. USG including spreads was 3.4%. Turnover decreased 5.2% to €12.6 billion, which included an adverse currency impact of (9.8)% and 1.5% from acquisitions net of disposals. Emerging markets grew by 5.1% with a strong contribution from volume, while price growth was modest in a lower inflation environment. Developed markets grew by 1.1% despite continued price deflation in Europe and North America.

Commenting on the results, CEO Paul Polman states: “The first quarter demonstrates another good volume-driven performance across all three divisions. The broad-based growth, including over 4% volume growth in emerging markets, shows that the ‘Connected 4 Growth’ programme is working and enhancing our long-term compounding growth model. We are further improving the quality and speed of our global and local innovation as a result of a more agile, consumer-facing organisation. At the same time, we are maintaining strong delivery from our savings programmes and expecting to complete the exit from spreads in the middle of the year.

“For the full year, we continue to expect underlying sales growth in the 3%–5% range and an improvement in underlying operating margin and cash flow that keep us on track for our 2020 goals. We intend to start a share buy-back programme of up to €6 billion in May to return the expected after-tax proceeds from the spreads disposal. We are raising the dividend by 8%, reflecting confidence in our outlook.”

According to the company, in the markets in which it operated, growth was around 3%, similar to 2017. It did, however, see an improvement in volumes and a lower contribution from price growth, particularly in emerging markets.

The Foods & Refreshment Division continued to build its presence in emerging markets and sustained a strong performance in food service channels. At the same time, the company further modernised the portfolio by responding to consumer needs in fast-growing segments such as ‘free-from,’ vegan, health and wellness.

Innovations behind its premium ice cream brands contributed to another good start to the year. These included the launch of Magnum Core and Praline variants, and the roll-out of the successful Ben & Jerry’s non-dairy platform from the US into Europe. Breyers delights’ low-calorie, high-protein variants have now been launched in 11 countries.

Leaf tea continued with the positive momentum shown in 2017, driven by strong innovations in green and other speciality teas in India, where it extended market leadership, and strong performances in North Africa. The recently acquired Pukka Herbs organic herbal tea business had a very good first quarter.

In foods, Knorr delivered another quarter of growth above the group average, primarily driven by cooking products in emerging markets, as well as innovations in developed markets. These included the launch of mini meals in Europe, snack products with natural and nutritious ingredients, and Selects side dishes in the US. Hellmann’s continued to communicate its strong natural claims while further extending its range with the launch of avocado and sunflower oil variants with Omega 3 and Vitamin E in the US. Volume growth improved, however, pricing turned negative in an increased promotional environment.
 
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