Unilever reports profitable growth ahead of its markets

26 Jul 2017

Unilever has announced its results for the first half of 2017, which it says show profitable growth ahead of its markets, driven by the company’s Connected 4 Growth change programme.

Unilever reports profitable growth ahead of its markets

Unilever has announced its results for the first half of 2017, which it says show profitable growth ahead of its markets, driven by the company’s Connected 4 Growth change programme.

The company reported strong progress against the strategic objectives it set out for 2020. Turnover increased 5.5%, including a positive currency impact of 1.7%, and underlying sales grew 3.0%, ahead of its markets. Excluding spreads, underlying sales grew 3.4% with volume up 0.3%. Underlying operating margin was up 180bps, reflecting faster savings delivery and phasing of investment. Underlying earnings per share were up 14%.

“Our first-half results show continued growth well ahead of our markets and a substantial step-up in profitability despite the persisting volatile global trading environment,” said CEO Paul Polman. “It once more shows the validity of Unilever’s long-term compounding growth model. Our change programme ‘Connected 4 Growth’ (C4G), which started in the autumn of 2016, is delivering ahead of plan.”

“The transformation of Unilever into a more resilient, more competitive and more profitable business is accelerating. C4G is making our business even more agile, less complex and increasingly responsive to fast-changing consumer trends. The resulting increase in innovation speed and effectiveness will allow us to grow ahead of market. We see this as a proven way of delivering long-term shareholder value. C4G also enables a further step-change in margin expansion and cash flow delivery, as we secure efficiencies from the roll-out of our savings programmes and benefit from the investments we have made over the last few years.”

“The actions we are taking keep us on track for another year of underlying sales growth ahead of our markets, in the 3–5% range. We anticipate accelerating growth in the second half of the year driven by the phasing of our innovation plans and a step-up in brand and marketing investment. We now expect an improvement in underlying operating margin this year of at least 100 basis points and strong cash flow.”

Unilever said that its foods business continued to modernise the portfolio while building its presence in emerging markets and sustaining a strong performance in the food service channels. However, the overall growth was adversely affected by declines of some of the company’s non-core brands in Europe.

Knorr, Unilever’s largest food brand, performed well by responding to key needs such as nutrition deficiency or time-saving cooking products. Knorr Mealmakers with 100% natural ingredients have now been extended into 100% natural seasonings.

In dressings, Hellmann’s relaunched the brand with strengthened naturalness claims while the organic variants have been rolled out from North America into Europe.

In spreads, the new margarines with specialty oils and the roll-out of the dairy-free variants are said to be performing well. The rate of decline in spreads has slowed to 3.7% as sales growth in emerging markets partially offset the continued market contraction in developed countries.

Ice cream delivered strong growth driven by margin-accretive innovations behind Unilever’s premium brands, such as Ben & Jerry’s pint range ‘Topped’, and the ‘Wich sandwich. Magnum grew at double-digit rates, helped by the new Magnum pints. The company has extended its less than 50 calories offering under Solero and launched vegan and gluten-free variants under Cornetto.

Leaf tea showed good growth as a result of innovations in specialty and premium tea segments. Lipton was launched in Brazil and Argentina, and is extending its presence in the faster-growing green and matcha segments, while T2 continued to show strong growth.