Prestige beauty and deo strong as Unilever 2019 net profit drops

The European-headquartered consumer goods giant totted up €52bn in turnover for 2019, up 2% on the previous year, but net profit was down 38.4% at €6bn.

Its largest division – beauty and personal care – generated €21.9bn for the full year, slightly up on the previous with an underlying sales growth of 2.6%, but growth in the fourth-quarter (Q4) sat at just 0.5%.

Slowdown in parts of EMEA​

Europe represented €11.4bn of Unilever’s total turnover in 2019, with underlying sales down 0.6% on the previous year. And across the EMEA region, the beauty major reported a “significant slowdown”​ in North Africa, Middle East and Turkey.

Speaking to analysts on Unilever’s full-year financial earnings call, chief financial officer Graeme Pitkethly said: “Much of this was expected as inflation dropped, particularly in Turkey, and volumes were weaker across the region (…) However, all of these countries remain good long-term prospects and, as always, we won’t let a few quarters or a quarter of bumpiness put us off investing and doing the right things for the long-term.”​

He added that France, Germany and the UK had also “all had a tough year for growth”​ due to difficult trading environments, although deodorants and skin care had grown across Europe.

‘Advanced technology’ in beauty and personal care​

Within Unilever’s beauty and personal care division, the company said deodorants had delivered “broad-based growth”​ for the year, with a particularly strong performance from Dove.

Dove's zero aluminium range, for example, had performed well across Europe and North America and the Rexona Clinical range that incorporated patented anti-perspirant technology had also done well.

Growth in Dove had also been supported by its “microbiome-friendly innovations”,​ Unilever said, notably with its shower gel SKU.

Alan Jope, CEO of Unilever, told analysts technological investments had played an important role in the success of these brands. “[In] beauty and personal care, we see how important advanced technology is. And so, our Dove product that works with your natural biome - that’s the bug colonies that are on your body - to actually promote skin health, that’s using some pretty advanced technology. And maybe even higher levels of technology is our (…) Rexona Clinicals range. It’s truly a breakthrough in antiperspirant efficacy,”​ Jope said.

Prestige brands had also proved to be strong within beauty and personal care for 2019, delivering double-digit growth for the year, Unilever said. “Strong performances” ​were seen in Dermalogica, Hourglass and Living Proof. The acquisitions of French derma-cosmetic brand Garanci and modern skin care brand Tatcha had also added to prestige’s strength. Prestige generated a turnover of more than €600m in 2019, according to Pitkethly.

2020 growth plans spotlight luxury skin care​

Jope said luxury beauty, particularly skin care, would be an important category for stimulating future growth in 2020.

“We’ve been successful in building up a prestige portfolio and it’s on track for its €1 billion ambition. But there is much more opportunity, and we are raising our ambition, particularly in the high-growth area of Asian skin care,”​ Jope said.

Sales growth for 2020 was estimated to sit between 3-5%.