Unilever to keep investing in brands as global economy slows performance
The Anglo-Dutch consumer goods giant saw turnover increase by 9.4% to €13.4 billion in the third quarter and underlying sales grew 5.7%, above expectations, although new CFO Graeme Pitkethly played this down saying that without a few one-off benefits sales growth would have been in the 3.5-4% range
Despite a positive performance in some areas, Unilever mentions that consumer demand remains fragile and volume growth was barely positive in the markets in which it operates, with many emerging markets continuing to be weak.
“We continue to see soft markets with no immediate sign of getting help from an improving global economy,” says Paul Polman.
Pitkethly, who took on his new role as CFO at the start of the month, adds that: “in a number of countries, the economic environment is getting worse, with the situation on the ground dominated by the effects of currency depreciation.”
‘Strong’ Personal Care growth
Despite weakness in some markets and business segments, Pitkethly highlights a ‘strong’ quarter in Personal Care, mentioning some highlights which saw growth stepped up behind innovations that grow the core of Unilever’s brands and extend into more premium segments.
Deodorants also benefited from the continued success of the dry spray launch in North America and the roll-out of compressed formats into Latin America.
In hair, growth was driven by the roll-out of the Dove Advanced Hair Series and the success of Lux Luminique in Japan. The improved Dove body wash formulation, which was introduced to China in this quarter, continued to perform well.
CEO outlook
With regards to the business as a whole, Polman adds that the Unilever’s model of competitive, profitable, consistent and responsible growth is built on sustained investment in its brands, infrastructure, and people, and this will provide the basis for the company going forward.
“The sharpened strategies across the four categories are gaining traction and a stronger innovation pipeline is increasingly driving growth. As the results show, the scale and breadth of our portfolio brings resilience in challenging economic conditions,” he says.
Polman, explains Unilever is responding quickly to accelerating change and high volatility with a focus on continuous cost management while increasing the company’s organisational agility.
“We will continue to invest steadily behind our brands, innovations and go-to-market capabilities,” he says.
“These actions keep us on track for another year of volume growth ahead of our markets and we now expect underlying sales growth for the year towards the upper end of the 2-4% range. We continue to expect steady improvement in core operating margin and strong cash flow.”
