Unilever has announced its results for the third quarter of 2016, which show that the company is growing competitively despite challenging markets.
- Underlying sales growth 4.2%, ahead of our markets, with price up 2.8% and volume up 1.3%
- Emerging markets underlying sales growth 7.2% with price up 5.5% and volume up 1.6%
- Sales increased by 4.7% at constant exchange rates while turnover, which is at current rates, declined 1.8%
Third quarter highlights
- Underlying sales growth 3.2% with price up 3.6% and volume down (0.4)% against a strong quarter last year
- Sales increased by 3.4% at constant exchange rates while turnover, which is at current rates, declined 0.1%
Commenting on the results, CEO Paul Polman, says: “Our business continues to demonstrate its resilience by growing competitively and consistently in tough market conditions. Underlying sales growth of 4.2% in the first nine months, including over 7% in emerging countries, was ahead of our markets across all four categories. This was driven by strong innovations in support of our category strategies.
“During the third quarter, we have made further progress in reshaping our portfolio, adding businesses in fast-growing segments with the acquisitions of Dollar Shave Club, Blueair and Seventh Generation.
“With markets remaining soft and volatile, we have continued to transform our business at an accelerated pace. We are progressing well with the fast implementation of our change programmes: net revenue management, zero-based budgeting and ‘Connected 4 Growth’, making our organisation more agile and responsive to market needs.
“These actions keep us on track for another year of volume growth ahead of our markets, steady improvement in core operating margin and strong cash flow.”
Consumer demand remained weak and in the markets in which we operate volumes have slowed further and are flat in aggregate. This is particularly the case in Latin America where currency devaluation has pushed up the cost of living of our consumers, squeezing disposable incomes.
Underlying sales grew 3.2% in the third quarter against a strong comparator last year and a deterioration of trading conditions in a number of countries. Underlying sales growth in emerging markets was 5.6% while in developed markets it was flat. Due to a negative currency impact in the quarter of (3.4)% turnover was virtually stable at €13.4 billion.
Personal Care continued to grow the core of our brands through innovations, while extending into more premium segments. The slower growth in the third quarter reflects intense competition in many of our markets as well as the effect of a strong comparator last year.
Deodorants performed well driven by Rexona Antibacterial with 10x more odour protection which is now in 40 countries and by the continued success of dry sprays in North America.
In hair, growth was driven by the successful Sunsilk relaunch and by the TRESemmé Beauty-Full Volume range with unique reverse conditioning system.
In skin care, Simple demonstrated good growth driven by innovations in the naturals segment.
Foods sustained its return to growth with good performances in savoury, led by cooking products in emerging markets, and dressings, driven by the squeezy packs with proprietary easy-out technology and organic variants.
Knorr and Hellmann’s have successfully been updating their ranges with new packaging highlighting the naturalness of their ingredients. Hellmann’s has also broadened its offering with hot and barbecue sauces.
In spreads, the rate of decline has slowed in North America but continued in Europe as a result of the market contraction.
Growth in Home Care was driven by innovations in the higher margin segments and the successful roll-out of Omo with enhanced formulation and improved cleaning technology which has reached 27 countries. We launched the new Surf handwash powder with water-saving technology in South Africa.
Fabric conditioners continued to perform well supported by new variants of Comfort Intense with double-encapsulated fragrance technology that delivers long-lasting freshness.
In household care, growth was driven by the successful Cif Power and Shine sprays and the roll-out of Domestos toilet blocks in Europe. In India, we introduced a new Vim bar which allows for better and faster degreasing of the five toughest stains.
Ice cream had another strong season, helped as last year by good European weather and strong innovations behind our premium brands. These included the new Magnum Double range, the Ben & Jerry’s ‘Wich sandwich and dairy free range, as well as new variants of Talenti, the premium gelato brand which has grown 60% since acquisition two years ago.
In leaf tea, we are continuing to build our presence in more premium segments with good growth from T2, green and specialty teas. We are also introducing Pure Leaf, already well-established in ready-to-drink tea, as a premium brand in our leaf tea portfolio in the US.
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