Heatwave helps warm Unilever sales
● Retailer cheers 3.8% increase but remains quiet on HQ backtracking
Surging demand for ice cream in the summer heatwave helped Magnum-to-marmite giant Unilever post higher third-quarter sales.
The consumer goods giant said sales growth picked up across all divisions in the period, with a 3.8 per cent year-onyear jump overall to €12.5 billion (£11bn), with sales up 1.4 per cent across Europe as the region basked in a prolonged hot weather spot.
Its update marks the first set of figures since Unilever’s relocation U-turn saw the group ditch plans to move its corporate headquarters from London to Rotterdam following investor pressure.
Peter Newham, the group’s director and executive vice president for reward, said in a Commons committee hearing on Tuesday that the group had failed to talk to shareholders in the run-up to its decision to switch to the Netherlands.
But chief executive Paul Polman reportedly told an audience at the launch of the One Young World conference on Wednesday that he believed the proposal had been the
0 The retailer earlier this year ditched plans to move its HQ to Rotterdam.
GEORGE SALMON
right thing to do. He said: “One of the things with leadership is, is it the harder life or is it the easier one? We would like always to propose the harder, right one and go for that and not the easier one.”
Unilever’s third-quarter results showed that, of the 3.8 per cent underlying sales growth, 1.4 per cent came from higher prices.
The group stripped out Argentina figures, as inflation in the country would have skewed organic growth.
It thanked strong growth in
ice cream sales for a boost in the quarter, with new launches such as its Magnum praline and Kinder ice cream selling well in the hot weather.
In the UK, it said good ice cream sales were partially offset by competition in the fabric care market. Polman said: “Growth accelerated in the third quarter across all divisions. We were able to increase prices whilst still maintaining good volume growth, which reflects the strength of our brands and quality of our innovation programme.” The group also confirmed its annual target to reach 3 per cent to 5 per cent underlying sales organic growth.
But George Salmon, equity analyst at Hargreaves Lansdown, said the results show the pros and cons of Unilever’s “significant” emerging market exposure.
The problems in Argentina, for example, “highlight how economic instability is always a risk in emerging markets,” he added.
“Still, rising population and wealth should bring longrun tailwinds, and investors will be pleased to see strong growth in Asia, the Middle East and Africa this time.
“It’s encouraging to see underlying sales move in the right direction, with both volumes and pricing contributing to performance. However, while these results are solid enough, they’re not quite the stellar showing investors would have been looking for.”
And Nicla Di Palma, equity analyst at Brewin Dolphin, highlighted the double-digit growth in prestige beauty and personal care brands, a key focus for management.
“The company remained quiet over its recent U-turn on plans for simplification; although, we do expect to see an explanation from management as to what they plan to do next,” she said.
“It’s encouraging to see underlying sales move in the right direction, with both volumes and pricing contributing to performance”