FDBusiness.com

Unilever has reported a 12% increase in turnover to €27.0 billion including a positive currency impact of 10% for the first half of 2015. Underlying sales growth was 2.9% with volume up 1.1% and price up 1.7%. The core operating margin improved by 50bps to 14.5% and core operating profit rose 16%. However operating profit declined by 13% to €3.8 billion reflecting profits on disposals in 2014.

“The first half demonstrates again the progress we have made in the transformation of Unilever to deliver consistent, competitive, profitable and responsible growth, now in the seventh year,” says Paul Polman, chief executive of Unilever. “We plan for another year of volume growth ahead of our markets, steady improvement in core operating margin and strong cash flow.”

Paul Polman, chief executive of Unilever.

Underlying sales growth in the first half was broad-based across our four categories – Personal Care, Home Care, Refreshment and Foods. While growth in Refreshment was due to price, volumes drove the performance in Home Care and Foods. Emerging markets grew by 6.0% with an increased contribution from volume. Unilever held volumes in developed markets as pricing continued to decline in Europe.

In Foods core operating margin improved by 30bps driven by lower overheads. Core operating profit was up by €0.1 billion at €1.2 billion as operational performance and positive currency were partially offset by the prior year disposals. Savoury showed broad-based growth helped by the success of cooking products in emerging markets and soups in Europe. Growth was driven by innovations and market development campaigns behind the group’s global and local brands. Unilever is introducing more natural products like Knorr wet soups and healthier ones such as fortified stock cubes in Africa which help address iron deficiency. In dressings, Hellmann’s demonstrated good growth driven by a strong performance in Latin America and by the successful squeezy packaging which has been brought from Europe to North America. Spreads performance was impacted by the sustained contraction in developed markets. The new Baking, Cooking & Spreads unit went live on 1 July 2015 which will benefit from future focus as it continues to reposition the business to more attractive segments like melanges and premium cooking oil blends.

Refreshment grew solidly in value despite volumes being slightly down against a strong prior year performance. Unilever upgraded the mix in ice cream with innovations behind the premium brands, such as Magnum Pink and Black variants, Ben & Jerry’s Cores range and the new flavours of Breyer’s Gelato. The recent acquisition Talenti started off well, benefitting from increased distribution in the United States. In leaf tea we refreshed the Lipton brand with new packaging and extended the premium tea boutiques T2. At the same time we are building our presence in faster growing segments where we are underrepresented like green tea. Core operating margin in Refreshment was up 60bps with a strong overheads reduction. Core operating profit increased by €0.1 billion at €0.6 billion.