Unilever is keeping ahead of its markets

By Lucy Whitehouse

- Last updated on GMT

Unilever is keeping ahead of its markets

Related tags Profit

In its half-year results, Unilever has revealed that it is enjoying profitable growth, keeping it ahead of its market with its profits jumping by a fifth.

The consumer goods multinational says the results come as a confirmation of its Connected 4 Growth change programme, based on the tenants of lower costs, simpler processes, stronger innovation, and engaged people.

Underlying sales grew 3.0%, ahead of our markets, with growth in all our categories and sub-categories except for spreads. Turnover increased 5.5% to €27.7 billion, which included a positive currency impact of 1.7% and 0.8% from acquisitions net of disposals.

“Our first-half results show continued growth well ahead of our markets and a substantial step-up in profitability despite the persisting volatile global trading environment,” ​explains Paul Polman, CEO.

“It once more shows the validity of Unilever’s long-term compounding growth model. Our change programme ‘Connected 4 Growth’ (C4G), which started in the autumn of 2016, is delivering ahead of plan.”

Challenging markets

Despite the strong performance, Unilever notes that markets do remain challenging. In the markets in which it operates, it notes, volumes were virtually flat in aggregate.

Unilever says the economic crisis in Brazil continued to present a significant headwind, while in India, trade stock levels thinned in the second quarter ahead of the implementation of the Goods and Services Tax, and markets in Indonesia were adversely impacted by fewer trading days due to public holidays.

These markets particularly impacted on the multinational’s personal care business performance.

“Personal Care continued to grow the core while expanding in high-growth segments and building in premium positions. Challenging market conditions in some of the key markets – such as India, Brazil and Indonesia – weighed on the overall growth rate​,” notes Unilever.

Despite this, the company is keen to emphasise its resilience.“The transformation of Unilever into a more resilient, more competitive and more profitable business is accelerating,​” confirms Polman.

“C4G is making our business even more agile, less complex and increasingly responsive to fast-changing consumer trends. The resulting increase in innovation speed and effectiveness will allow us to grow ahead of market.​”

Forecast ahead

The company says it anticipates underlying sales to remain ahead of its markets in the rest of the year.

The actions we are taking keep us on track for another year of underlying sales growth ahead of our markets, in the 3–5% range​,” explains Polman.

We anticipate accelerating growth in the second half of the year driven by the phasing of our innovation plans and a step-up in brand and marketing investment. We now expect an improvement in underlying operating margin this year of at least 100 basis points and strong cash flow.”

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