FDBusiness.com

Unilever has announced its results for the first half of 2018, which show a solid all-round performance despite some challenging markets. Turnover decreased 5.0% to €26.4 billion including an adverse translational currency impact of 8.9% but underlying sales growth excluding spreads was 2.7% with volume 2.5% and price 0.2%. Unilever’s underlying operating margin improved by 80bps to 18.6%.

Paul Polman, chief executive of Unilever, comments: “Our first half results show solid volume-driven growth across all three divisions, which was achieved despite the effects of an extended truckers’ strike in Brazil, one of our biggest markets. Growth was driven by strong innovation and continued expansion in future growth markets. The margin improvement was of high quality and in line with our strategy, driven by further gross margin progression, increased investment behind our brands and strong savings delivery.

He continues: “The Connected 4 Growth change programme – which makes our organisation more agile and resilient – is driving the step-up in our innovation and savings programmes. As part of the continued portfolio evolution, we completed the exit from spreads on 2 July 2018. In anticipation of the disposal proceeds, we have already returned €3 billion as part of our €6 billion share buyback programme that will complete before the end of the year. We have also signed an agreement to acquire a 75% stake in the Italian personal care business Equilibra.

He expects underlying sales growth in the 3% – 5% range, an improvement in underlying operating margin and strong cash flow for the full year.

The Foods & Refreshment division continued to build its presence in emerging markets and sustained a strong performance in food service channels. At the same time, Unilever continued to modernise the portfolio by responding to consumer needs in fast-growing segments such as organic, natural, vegan, health and wellness.

Ice cream delivered strong growth driven by innovations behind premium brands. These included the launch of Magnum Core & Praliné variant and the roll-out of the successful Ben & Jerry’s non-dairy platform from the US into Europe. The new Kinder® ice cream, launched after partnering with an Italian confectioner, had a very promising start in Germany and France.

In leaf tea, volume-led growth continued to be driven by strong innovations in India, where Unilever extended its market leadership. The recent acquisitions Pukka Herbs organic herbal tea and TAZO had a good first half in Europe and North America.

In foods, Knorr grew ahead of the group average, primarily driven by cooking products in emerging markets, as well as innovations in on-trend segments in developed markets. These included the launch of Knorr mini meals in Europe, snack products with natural and nutritious ingredients, and Knorr Selects side dishes in the US. Hellmann’s continued to communicate strong natural claims and in the US launched Hellmann’s Real Ketchup, made with six ingredients and sweetened only with honey. However, sales in dressings were slightly down in an intense promotional environment.