Unilever today (20 July) reported higher first-half profits helped by sales growth the consumer goods giant said was “ahead of our markets” and by the Knorr-to-Magnum maker’s efforts to control costs.
The company also lifted its forecast for its 2017 underlying operating margin, which it now expects to rise by “at least” 100 basis points, up from an earlier estimate of 80 basis points.
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Unilever, which is also behind brands from Ben & Jerry’s ice cream to Colman’s mustard, posted a 22.4% rise in net profit to EUR3.32bn (US$3.82bn) for the first six months of 2017.
The group, which has upped its focus on margins and profitability after spurning Kraft Heinz’s takeover interest earlier this year, reported a 27.9% in operating profit to EUR4.84bn.
Its first-half turnover rose 5.5% to EUR27.73bn.
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The business, dual-listed in the UK and the Netherlands, reported a 3% rise in its underlying sales in the first of 2017, a slower rate of growth than in the opening six months of 2016 but ahead of its markets, the company said.
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By GlobalDataUnilever’s underlying sales growth was made up by a 3% rise in prices and flat volumes, it said.
The company’s food arm reported a 2.1% increase in first-half turnover, although underlying sales growth, which strips out M&A and exchange rates, was slower at 0.6%. Underlying volumes fell 1.7%. Unilever said growth was hampered by “declines of some of our non-core brands in Europe”.
The rate of decline in Unilever’s spreads business, which the company plans to sell or de-merge, slowed to 3.7%. The company said growth in emerging markets partially offset “the continued market contraction in developed countries”.
Unilever said the underlying operating margin from food increased by 100 basis points “mainly due to brand and marketing efficiencies”.
Unilever’s refreshment division, which includes ice cream and drinks, reported a 3.9% increase in first-half turnover, helped by a 6.1% rise in underlying sales. Volumes provided 1.2 percentage points of the growth.
The company pointed to “strong growth” in ice cream, as new products helped margins. The division’s underlying operating margin was up 230 basis points, with improvements from ice cream and tea. Unilever cited “the premiumisation of the portfolio and savings delivery”.
Paul Polman, the group’s CEO, said the company’s “Connected 4 Growth” programme, which aims to make the business simpler and more agile, was paying off.
“The transformation of Unilever into a more resilient, more competitive and more profitable business is accelerating. 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 [the] market. We see this as a proven way of delivering long-term shareholder value.”
He added Unilever expects growth to “accelerate” in the second half of the year on the back of how the company has phased its roll out of new products and plans to invest more in brand and marketing.
Shares in Unilever were up 1.11% at 4,362p at 08:34 BST.
