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Unilever results show strong sales but profits hit by rising costs

By Simon Pitman , 02-Feb-2012

Unilever fourth quarter results show that sales continue to power ahead on a healthy performance in personal care and emerging markets, but profits are hit hard by rising costs.

Underlying sales in the final quarter grew by 6.5 per cent to reach €11.56m, driven by the fact that pricing added 4.8 per cent to the results, while volume growth contributed around 1.0 per cent.

Sales for the personal care division grew at the strongest rate of any of the four divisions during the period, up 8.7 per cent on an underlying basis to €4.12bn.

The figure was also driven by the company’s continued emphasis and expansion into the emerging markets, underlined by the fact that sales in those markets during the quarter delivered 11.5 per cent underlying growth.

Gains offset by rising costs

However, a lot of the gains, particularly in the emerging markets, where offset by the fact that rising costs continued to impact margins during the quarter, explaining why share prices on the London FTSE took a beating after the results were announced.

For the full year 2011 underlying sales growth was up 6.5 per cent to €46.46bn, whereas growth in net profit was less impressing, rising by 1 per cent to €4.62bn.

Breaking the figures down, the company said the stronger results in the personal care division were driven skin care, in particular by the success of the Vaseline Men range in South East Asia as well as growth of the Fair and Lovely line in the Indian market.

Skin care and hair care deliver double-digit growth

Likewise, strong performances were also noted by the Vaseline brand in the hand and body category, while Lifebuoy was described as delivering ‘strong momentum’ in the skin cleansing category.

Hair care also delivered double-digit growth during the final quarter, thanks to the Dove Damage Therapy and Suave Pro-Styling range, together with the re-launch of the Clear and the launch of TRESemme in Brazil.

“We expect the external macro-economic environment to remain difficult in 2012 and input cost headwinds will persist, although to a lesser extent than in 2012 and input cost headwinds will persist, although to a lesser extent than in 2011,” said CEO Paul Polman.

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