Focus on growth markets pays off as Unilever posts strong Q2 results

By Simon Pitman

- Last updated on GMT

Related tags Personal care United states dollar Henkel Hygiene Unilever

Unilever has posted strong second quarter and first half results, with sales and profits powering ahead in each of the company’s four divisions.

The company reported second quarter sales up 7.1 per cent on an underlying basis to €11.9bn, while the negative impact of currency translation meant the growth came in at 5.1 per cent.

For the first half year, the strong second quarter pushed sales growth significantly, with turnover growing by 4.1 per cent to €22.8bn, a figure that took into account a 1.6 per cent impact from foreign exchange.

Net profit for the half year was up by a healthy 9 per cent to €2.4bn, a result the company said was achieved thanks to higher pricing and effective price controls.

Analysts give results the thumbs up!

Analysts and industry observers have widely applauded the results, citing the fact that the strong performance has been achieved despite the fact that raw material and energy costs have been peaking during the first six months of this year.

“Volumes were robust and in line with the market, despite having taken price increases,“​ said Unilever CEO Robert McDonald in a trading statement.

“Our emerging markets business continues to deliver double digit growth. Performance in Western Europe was also strong in the second quarter so that the half year results reflect the true progress we have been making.”

Personal care continues to expand

Looking at the personal care market, second quarter sales grew by 5.8 percent on an underlying basis to €3.7bn, a figure that came in at 4.4 per cent when taking into account currency translations.

For the first half of the year underlying sales were up 5.7 per cent to €7.2bn, which was 3.5 per cent with the impact of currency translation.

The company said that growth in its deodorants category was one of the main drivers and earmarked the Dove brand, with specific rollouts for Dove Men+Care and Dove Beauty Finish for women as being particularly successful.

In hair care, the Dove Damage Therapy and Dove Nourishing Oil Care, together with the re-launch of Clear in Asia, were highlighted as key drivers, while the company also mentioned that the integration of the Sara Lee business was also on track.

Unilever set for further expansion in personal care?

Unilever has been increasing its focus on the personal care segment recently, a strategy that was underlined by the acquisition of the Sara Lee business at the end of the year.

Indeed, earlier this week analysts at investment bank Liberum Capital said they expect Unilever to sell most of its food business in an effort to grow its home and personal care business.

The analysts speculate that any such deal would be used to fund a large acquisition in its home and personal care businesses, according to a Liberum Capital report, which underlines why now is the right time to buy Unilever stock.

Authors Pablo Zuanic and Lisa Hau said: “We expect Unilever at some point to implement a large accretive acquisition in the HPC (household and personal care) space and to partly fund it by selling its Food unit (excluding ice cream and beverages) which we estimate can be sold at about one times sales (or €14bn).

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