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Unilever’s Long-term Focus is Paying Off

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Unilever’s Long-term Focus is Paying Off

Unilever’s Long-term Focus is Paying Off
July 22
12:28 2016

Unilever has reported 4.7% rise in underlying sales growth to €26.3 billion for the first half, ahead of its markets, with volume up 2.2%. Sales increased by 5.4% at constant exchange rates but decreased by 2.6% at current exchange rates. Operating profit was down by 0.1% to €3.8 billion at current exchange rates and net profit rose 2.0% to €2.7 billion.

“Our first half results further demonstrate the progress we have made in the transformation of Unilever to deliver consistent, competitive, profitable and responsible growth,” says Paul Polman (pictured above), chief executive of Unilever. “Despite a challenging environment with slower global economic growth and intensifying geopolitical instability, we have again grown profitably in our markets, competitively and driven by strong innovations.”

He adds: “This consistency of performance, achieved during a period of high volatility and accelerating change, shows that our long-term focus is paying off. We are seeing the benefits from delivery against the four differentiated category strategies that continue to guide investment in our brands, our infrastructure and our people.”

UnileverFoodSolutionsGrowth in Unilever’s Foods category accelerated with a good performance in savoury and dressings and a continued decline in spreads as a result of the market contraction in developed countries. Savoury showed good growth driven by cooking products in emerging markets, innovations around naturalness such as Knorr Mealmakers with 100% natural ingredients in Europe and local brands such as Bango in Indonesia and Robertsons in South Africa. Hellmann’s grew strongly in dressings helped by the convenient squeeze packaging with proprietary easy-out technology, the launch of Carefully Crafted and Organic variants as well as the expansion into Italy and Belgium. In spreads Flora highlighted its plant-based health credentials with a new advertising campaign and introduced a dairy-free variant in the United Kingdom. Core operating margin in Food was down 70bps due to gains on pension plan changes in the prior year and higher restructuring costs.

UnileverIceCreamLineWithin Unilever’s Refreshment business, ice cream delivered good growth driven by margin-accretive innovations behind premium brands, such as the new Magnum Double range, the Ben & Jerry’s ‘Wich sandwich and dairy free range, as well as premium desserts under Breyer’s Gelato and Carte D’Or Sorbet. Unilever continued to develop the value segment with a new yoghurt variant of the smaller-sized Cornetto. In leaf tea, the group has been building its presence in more premium products with T2 and machine-compatible tea capsules. Lipton and PG Tips continued to extend in the faster-growing green and speciality teas segments where Unilever is still under-represented. Core operating margin in Refreshment was up 90bps driven by improved mix and savings in ice cream as well as brand and marketing efficiencies.

Unilever’s other two categories are Homecare and Personal Care.

“We have been preparing ourselves for tougher market conditions in 2016 and do not see any sign of an improving global economy,” remarks Paul Polman. “Our priorities continue to be volume-driven growth ahead of our markets, steady improvement in core operating margin and strong cash flow.”

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