A Year of Continued Profitable Growth at Unilever
Despite volatile market conditions, Unilever has reported continued profitable growth for its 2018 financial year. Underlying sales, excluding the spreads business that was sold last July, rose 3.1% to Eur49.6 billion with 2.1% volume and 1.0% price growth. Underlying operating margin increased 90bps and underlying earnings per share increased 5.2%
Alan Jope (pictured), chief executive of Unilever, comments: “2018 was a solid year for Unilever, with good volume growth and high-quality margin progression. Looking forward, accelerating growth will be our number one priority. With so many of our brands enjoying leadership positions, we have significant opportunities to develop our markets, as well as to benefit from our deep global reach and purpose-led brands.”
He continues: “We will capitalise on our strengthened organisation and portfolio, and our digital transformation programme, to bring higher levels of speed and agility. Strong delivery from our savings programmes will improve productivity and fund our growth ambitions. In 2019 we expect market conditions to remain challenging.”
Unilever is anticipating underlying sales growth in the lower half of its multi-year 3–5% range, with continued improvement in underlying operating margin and another year of strong free cash flow.
Underlying sales excluding spreads at Unilever’s Food & Refreshment business grew 2.3% to Eur18.8 billion with 1.6% from volume. Underlying operating margin increased 80bps as a result of strong gross margin improvement and lower overheads, despite an adverse impact from the spreads disposal.
Ice cream had another strong year helped by innovations on Unilever’s premium brands which included a new Magnum Praline variant and a non-dairy range of Ben & Jerry’s. The launch of Kinder® ice cream and good weather helped to deliver strong ice cream growth in Europe.
Sales in tea grew modestly. Emerging markets growth was driven by good performance on core brands like Brooke Bond in India. In developed markets, challenges in black tea offset good growth from Pukka and the new organic Lipton range.
In savoury, Knorr was helped by good performance of cooking products in emerging markets, and more organic and natural innovations such as a new ‘soup in glass’ range.
In dressings, campaigns centred around Hellmann’s purpose to fight food waste helped to increase brand equity, but sales were held back by promotional intensity, particularly in the US. Unilever’s actions to transform the portfolio are working. Strong innovations including Knorr rice and pasta pots as well as new brands Red Red, Prep Co and Mãe Terra helped to build scale in the fast-growing snacking segment. Unilever has announced an agreement to buy Horlicks in India, Bangladesh and 20 other markets.
