Unilever maintains growth - but is it enough?

By Simon Pitman

- Last updated on GMT

Related tags: Cent, Procter & gamble, The quarter at tropicana

Unilever announces second quarter results showing that it has
maintained its steady growth of late, but the questions remains
whether it is enough to remain competitive against major rival
Procter & Gamble.

The company said that its sales growth for the quarter came in at 3 per cent to reach €10.25bn, and up 6 per cent for the half year, to reach €19.79bn.

But underlying growth was not so strong for the Anglo-Dutch company, coming in at 3.4 per cent for the first half, compared to Procter & Gamble, which simultaneously announced that its first half underlying sales growth was up 6 per cent.

Procter & Gamble's big trump card has proved to be last year's purchase of Gillette, which has helped to drive growth in its personal care activities and to secure a bigger slice of the growing market for men's grooming products.

This move also allowed it to steal the title of world's largest consumer goods producer from Unilver.

There is room for a certain amount of cheer, as Unilever chief executive Patrick Cescau pointed out the fact that the results represented the sixth consecutive quarter of growth for the company and that its product portfolio was now a leaner more powerful machine following a number of divestments in the course of the last year.

Restructuring efforts have also made the company significantly more profitable, with net profits from the total operations up 33 per cent for the quarter to €1.04bn, and up 19 per cent for the six months to reach €2.10bn.

Likewise, the company's performance in the personal care sector has also helped to buoy results, worldwide.

"The first half year results give me confidence that we have largely succeeded in restoring competitiveness,"​ Cescau said.

"All regions and categories contributed to the growth and we continue to maintain market share in aggregate investment in support of our priorities has been rewarded by sustained progress in personal care and developing and emerging markets."

Personal care sales were up 6.5 per cent for the quarter, to reach €2.76bn, and up 9.9 per cent for the six month period, to reach €5.46bn.

Home and personal care sales were up 4.4 per cent for the quarter, to reach €4.55bn, and up 7.7 per cent for the six month period, to reach €9.06bn.

On a regional basis, European sales have proved to be the thorn in the side of Unilever's results in recent years, but they have turned the corner during the period, showing underlying growth of 0.3 per cent in the six month period and 1.0 per cent in the second quarter.

Significant launches in the region have included Dove 'summer glow' self-tanner, and the Axe fragrance 'Click, which has been rolled out globally.

Underlying sales growth came in at 3.2 per cent in the Americas in the first half of the year and 3.6 per cent for the quarter. The company said that this figure was particularly driven by strong growth in the Brazil market for hair care and deodorant, as well as good general growth in Canada and Venezuela.

In the Asia and Africa market the company reported that first half sales were up 8 per cent, while second quarter sales were up 8 per cent. India sustained double digit growth and China growth was 'very strong'.

On the back of global innovations, the new Sunsilk range proved highly successful in the region, as did the Axe/Lynx 'Click' fragrance.

Looking ahead to the full year the company says that it expects underlying sales growth of 3 - 5 per cent, with an operating margin in excess of 15 per cent derived from its current restructuring programme.

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