Unilever profits rise on big sales jump for personal care

By Simon Pitman

- Last updated on GMT

Related tags Personal care Europe Eastern europe

Unilever has reported a strong rise in its first quarter profits, mainly driven by a strong sales performance from its personal care division.

Group sales were up 4.1 per cent in underlying terms to €10.14bn, while sales volumes were up by 7.6 per cent and pricing up 3.3 per cent.

Net profit grew at 29 per cent at constant rates to €1.05bn, a figure that reflected the higher sales and came in spite of the fact that the company increased spend on advertising and marketing significantly.

The increased promotional spend was concentrated on a number of new product launches, which in the personal care category included expanding the Life Buoy brand.

Emerging markets lead growth

“Growth has been especially strong in emerging markets despite the heightened competitive activity,” said company CEO Paul Polman.

“We have continued to invest more in advertising and promotions to build brand equities and support the rollout of our innovations.”​ he added.

The improved results were driven by a particularly strong performance from its personal care division, which saw sales increase by 7.9 per cent to €1.79bn.

In contrast to this, the mainstay savoury, dressing and spreads division saw sales grow by only 0.1 per cent to €3.39bn during the quarter.

Innovations drive personal care growth

The company said that the improved performance in its personal care division was mainly driven by a ‘strong flow of innovation’, which included Dove Men+Care, together with a new range of Dove body washes in Europe, as well as Dove Damage Repair hair care range launched in the US.

The company also noted that the expansion of the Life Buoy soap range into new markets, which included Turkey, Malaysia and Egypt.

On a geographical basis, underlying sales growth was up by 7.6 per cent to €3.99bn in Asia, Africa and Central and Eastern Europe. In the Americas underlying sales growth was up 3.7 per cent to €3.34bn and up by 0.2 per cent in the Western European market to €2.80bn.

Despite strong growth in the Netherlands and the UK, the company said that the performance in Europe was hindered by a slower economic recovery in the southern European countries.

What's in store for 2010?

Looking ahead to the rest of the 2010 financial year, Polman was cautious, underlining the fact that economic conditions remain fragile.

“Commodity costs will increase in the second half, economies remain sluggish and competitive intensity will remain high,"​ he said.

"We will continue to focus on profitable volume growth, whilst delivering a steady and sustainable improvement in operating margin and strong cash flow.”

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