Personal Care boosts Unilever's Q4, but profits still tumble

By Simon Pitman

- Last updated on GMT

Related tags: Marketing, Unilever

Personal care helped buoy an otherwise shaky performance from Unilever as the company was hit by falling group sales in its mainstay European market.

Total sales for the fourth quarter grew by 1.8 per cent on an underlying basis to €9.66bn, representing volume growth of 5 per cent.

The results showed that the underlying prices for its products fell by 3.1 per cent, a figure that was attributed to the fall in commodity prices following the spike experienced in the corresponding quarter last year.

The sales were hit by the particularly poor performance in Western Europe, where underlying sales growth fell by 1.9 per cent to €2.86bn on the back of a continuing slow consumer market throughout the region.

Personal care bucks the trend

However, despite the sluggish performance in Europe, sales for the company’s personal care division worldwide were robust, rising 6.5 per cent on an underlying basis to €3.01bn, compared to the fourth quarter of 2008.

The company blamed lower quarterly profits on the falling sales in Europe, at net profit tumbled 24 per cent at current rates to €906m and operating profit falling 33 per cent at current rates to €972m.

For the full year 2009 total sales were up 3.5 per cent on an underlying basis, to €39.82bn, representing volume growth of 2.3 per cent and price growth of 1.2 percent, while personal care sales rose by 5.3 per cent to €11.87bn.

Full year net profit fell by 31 per cent to €3.66bn, while net operating profit fell by 30 per cent to €5.02bn.

Axe, Pond's and Dove deliver the goods

The company said that its personal care division delivered strong growth throughout 2009 ‘across the board’, sustained by a strong marketing campaign for the Dove brand, targeting Dove for Men in Europe and Dove Nutrium Moisture product lines in the US.

The Pond’s brand had been successful on a global basis in 2009, while the Axe brand had also had a strong year, boosted by the launch of the Axe hair range in the US.

In an interview posted on the Unilever website, CEO Paul Polman said that the ‘green shoots’ of economic recovery were not in evidence, despite the more positive spin given to the economic outlook by many leading politicians.

Personal care should again drive results in 2010

“We expect continued pressure on consumer spending power and heightened levels of competitive activity in 2010,“​ he said in a statement.

“We will continue to focus on volume growth as the main driver of long term value creation, whilst delivering steady and sustainable year-on-year improvement in operating margin and strong cash flow.”

For 2010, the company is expecting the challenging trading conditions to persist, although the outlook for the personal care division is likely to be stronger, particularly as the Sara Lee personal care business will be added to the results from the third quarter of the year.

Related topics: Business & Financial

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