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Challenging Year For Unilever

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Challenging Year For Unilever

Challenging Year For Unilever
January 22
12:23 2015

Unilever has reported a 2.7% decline in turnover to €48.4 billion for 2014 although underlying sales growth was 2.9%, ahead of the group’s markets, with volume up 1.0% and price up 1.9%. Operating profit increased by 6% to €8.0 billion and net profit was 5% higher at €5.5 billion as core operating margins improved by 40bps at current exchange rates.

Market growth was weak in emerging countries as economic pressures impacted consumer demand. Developed markets were flat, with a modest pick-up in North America partly offsetting market contraction in Europe. Globally, Unilever’s markets grew by around 2.5% with flat volumes.

Unilever’s Home Care, Personal Care and Refreshment businesses all grew but Foods declined slightly.

Foods sales were down by 0.6% to €12.4 billion as savoury and dressings both grew but spreads declined due to lower consumer demand for margarine in Europe and North America. Savoury growth was backed by successful market development campaigns for cooking ingredients in emerging markets. In India and Pakistan, Knorr built further scale driven by good performances in stock cubes, soups and noodles. Indonesia saw strong growth of Royco and Bango, both of which are well adapted to meet local needs. Dressings continued to grow helped by the launch of Hellmann’s in the Netherlands and Portugal.

In spreads Unilever launched blends of vegetable oil and butter such as Gold from Flora. It gained market share in margarine but this was insufficient to offset the decline of the category which also saw price deflation in a benign commodity cost environment. Unilever continued the pruning of its Foods portfolio in 2014 with a number of disposals, including Ragu and Bertolli pasta sauces in North America and the meat snacks business under the Bifi and Peperami brands in Europe.

The Refreshment business achieved underlying sales growth of 3.8% to €9.2 billion, reflecting good growth in ice cream driven by a strong innovation programme. The United States business returned to growth and gained market leadership with good contributions from Ben & Jerry’s Cores and Breyer’s Gelato. This will be enhanced with the recent acquisition of Talenti gelatos and sorbettos. Magnum celebrated its 25th anniversary with activities that reinforced the chocolate credentials of the brand.

Leaf tea grew although performance was mixed. Growth in the United States was driven by the success of Lipton K-Cups® and new liquid concentrate but sales were weaker in Russia and Poland. In the United Kingdom Unilever launched a range of fruit and green teas under the PG Tips brand to target this growing segment.

Paul Polman (pictured), chief executive of Unilever, says: “Despite a very challenging year for our industry with significant economic headwinds and weak markets we have delivered another year of competitive underlying sales growth and margin expansion. This consistency, now established over the last six years, has been achieved during a period of unprecedented volatility as we have built a more resilient company.”

He adds: “We do not foresee a significant improvement in market conditions in 2015. Against this background, we expect our full year performance to be similar to 2014 with the first quarter being softer but growth improving during the year.”

 

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