Prestige beauty and deo strong as Unilever 2019 net profit drops

By Kacey Culliney contact

- Last updated on GMT

Despite a wider EMEA slowdown for Unilever, deodorants performed well across the region in 2019 (Getty Images)
Despite a wider EMEA slowdown for Unilever, deodorants performed well across the region in 2019 (Getty Images)

Related tags: Unilever, financial results, Dove, Prestige beauty, EMEA

Unilever has reported a net profit decline for 2019, with a clear slowdown in North Africa, Middle East and Turkey, but says prestige beauty and skin care should stimulate future growth.

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%.

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