Unilever releases its full-year 2016 results: sales growth below expectations

31-Jan-2017 - Last updated on 31-Jan-2017 at 14:25 GMT

Multinational consumer goods giant Unilever has released its annual report, acknowledging that its performance was beset by challenging market conditions.

Underlying sales reached growth of 3.7%, which Reuters reports falls short of the predicted 3.9% for the year. The release of the results during last week led to a drop in the company’s shares by 4.5% - its worst day in nearly a year.

The company, however, appears keen to emphasise that although not at expected levels in some areas, its performance was not disappointing when considered in the context of the market challenges faced during the year. Free cash flow was at EUR 4.8bn, for example, in line with the ‘very strong’ delivery of 2015.

Indeed, speaking of the results, Paul Polman, CEO, said: “We have delivered another good all-round performance despite severe economic disruptions, particularly in India and Brazil, two of our largest markets.

“This further demonstrates the progress we have made in transforming Unilever into a more resilient business. We have again grown ahead of our markets, driven by strong innovations that support our category strategies.”

Personal care: acquisitions in focus

Polman spoke of the importance the company is placing on increasing its connectivity and in reshaping its portfolio. He picked out Dollar Shave Club, Living Proof and Seventh Generation as key examples of this.

“At a time of unprecedented global change, ‘Connected 4 Growth’ – the next stage in our transformation – will make Unilever simpler, faster and more connected with our consumers and customers, and we are already starting to see positive results,” he confirmed.

“We are also making further progress in reshaping our portfolio, adding businesses in fast-growing segments.”

Personal Care continued to grow the core through innovations while extending into more premium segments, the company notes.

Deodorants performed well, driven by the continued success of dry sprays in North America and Rexona Antibacterial with 10x more odour protection, which is now in over 50 countries.

Looking forward

In terms of how Unilever intends to progress from here, the company says its three priorities continue to be:

volume growth ahead of its markets
a further increase in core operating margin
strong cash flow.

It cautioned that, certainly initially in 2017, difficult markets would mean a ‘slow start’.

“The tough market conditions which made the end of the year particularly challenging are likely to continue in the first half of 2017. Against this background, we expect a slow start with growth improving as the year progresses.”