Unilever Q2 results: summaryEmerging markets continued to drive growth, with India delivering mid-single-digit growth, supported by double-digit growth in HorlicksChina and the US were key growth markets for Unilever Food Solutions, posting volume-led growth as the business expanded its reachEurope remained weak, with soft market conditions and pricing pressure in Foods contributing to a regional sales declineBrazil and Asia Pacific Africa showed strong momentum for Hellmann\u2019s, helping offset challenges in developed markets, particularly the US<\/p>\n
Foods delivered modest volume-led growth in Unilever\u2019s Q2 results, released today.<\/p>\n
It saw 1.2% underlying sales growth (USG), with 1.2% volume and flat price. <\/p>\n
However, underlying operating profit in Foods was \u20ac1.5bn, down 4.3% from the previous year, suggesting that food inflation is still placing pressure on profit.<\/p>\n
Overall, Unilever saw its strongest volume-led growth in a decade. USG in the first half was 4.8%, with 4.2% from volume and 0.6% from price, accelerating in the second quarter to 5.8% USG, led by 5.5% volume. <\/p>\n
Power Brands, which account for 78% of Unilever\u2019s turnover, led the growth. This portfolio includes Hellmann\u2019s, Horlicks and Knorr, along with beauty, personal care and home care products such as Dove, Vaseline and Comfort. They delivered 6.0% USG with 5.4% volume. <\/p>\n
In a statement, CEO Fernando Fernandez, says: \u201cWe have delivered a strong volume-led performance in the first half, with a significant step-up in the second quarter \u2013 the best volume quarter at Unilever in over a decade. Our Power Brands continued to outperform, with all Business Groups delivering volume-led growth.”<\/p>\n
A mixed picture for Foods<\/p>\n
Food accounts for 25% of Group turnover and it had mixed success.<\/p>\n
Emerging markets continue to be drivers for growth. India grew mid-single digit led by double-digit growth in Horlicks. Unilever Food Solutions delivered low-single digit volume-led growth with good progress in its largest markets, China and the US.<\/p>\n
However, developed markets declined. The company says that this reflects \u201ca softer market environment and increased competition in US condiments, where we are taking steps to correct share loss in new growth segments within premium and avocado mayonnaise\u201d. <\/p>\n
In Europe, the overall figures were -0.9% USG with -0.2% volume and -0.6% price, driven by soft markets and price in Foods.<\/p>\n
In North America, overall growth improved to 3.6% in the second quarter with 4.4% volume, but Foods was \u201cbelow expectations\u201d. <\/p>\n
Unilever says that it expects Foods growth to accelerate in the second half of the year, led by innovation and improved developed market performance. <\/p>\n
A deeper dive<\/p>\n
Breaking down Foods performance, Unilever says that cooking aids was flat, with flat volume and price. Knorr – the company\u2019s largest food brand – grew low-single digit. <\/p>\n
For condiments, low-single digit growth was seen, led by volume. Hellmann\u2019s grew volume low-single digit with \u201ccontinued strong momentum in emerging markets including Brazil and Asia Pacific Africa\u201d. <\/p>\n
However, the company warned of condiment price increases. <\/p>\n
\u201cGrowth is expected to improve in the second half led by innovation and commodity-driven price increases.\u201d<\/p>\n
Unilever Food Solutions also grew low-single digit, led by volume. China saw low-single digit growth \u201creflecting increased reach and penetration and gradual improvements in away-from-home consumption\u201d and the US grew mid-single digit, driven by volume. <\/p>\n
Strategy remains unchanged <\/p>\n
The company\u2019s capital allocation priorities remain the same.<\/p>\n
\u201cWe will continue to reshape our portfolio through bolt-on acquisitions and selective disposals, return capital to shareholders through our attractive dividend and use surplus cash to fund share buybacks,\u201d it says. <\/p>\n
It also states that its productivity programme, designed to \u201csimplify the business and remove stranded overheads related to Ice Cream\u201d, was completed ahead of schedule.<\/p>\n
Referencing its tie-up with McCormick, it says that \u201cworkstreams are underway including around carve-out financials, tax and anti-trust, synergy delivery, and integration\u201d. <\/p>\n
\u201cThese results show our ability to continue performing while transforming our portfolio,\u201d concludes Fernandez. \u201cOur brands are stronger, our execution is sharper and we are driving Desire at Scale. Our combination of Foods with McCormick is progressing well and will unlock significant value, making Unilever a focused pureplay HPC company, while giving Foods the platform to thrive as part of a global powerhouse in flavour.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Unilever Q2 results: summaryEmerging markets continued to drive growth, with India delivering mid-single-digit growth, supported by double-digit growth…\n","protected":false},"author":2,"featured_media":92017,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[20694],"tags":[633,12703,21201,5234,2233,12213],"class_list":["post-92016","post","type-post","status-publish","format-standard","has-post-thumbnail","category-unilever","tag-business","tag-identity","tag-insignia","tag-sign","tag-stability","tag-unilever"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/116998012105840460","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/92016","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=92016"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/92016\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/92017"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=92016"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=92016"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=92016"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}