Unilever Q1 food sales ‘disappointing’

By Nicholas Robinson

- Last updated on GMT

Unilever's refreshment category performed well, driven by fruit and herbal teas
Unilever's refreshment category performed well, driven by fruit and herbal teas

Related tags Ice cream Unilever

Unilever’s poor food results in its first financial quarter (Q1) update for 2014 remained “disappointing”, affected by the late timing of Easter, but the company’s overall outlook was strong, City analysts have said.

The maker of consumer products including Ben & Jerry’s ice cream and Knorr stock cubes reported overall food sales for the start of 2014 at €3bn (£2.5bn), with underlying sales growth down by 1.7% and underlying volume growth down by 2%, compared with the same period last year.

Paul Polman, Unilever ceo, said: “The decline in foods was largely explained by the later timing of Easter and I am confident that we are now taking the right actions to improve performance.”

The refreshment category saw underlying sales growth of 5.9% to €2.1bn (£1.73bn), driven by strong ice cream sales in Brazil and Australia, as well as a positive start to the ice cream season in Europe, fuelled by good weather.

Strong ice cream sales

An ice cream innovation programme launched this year is also expected to further boost the refreshment category’s performance. The programme included the launch of a new artisanal ice cream range in Europe and the release of new Cornetto flavours and double toppings in China, said Unilever.

Launches of a range of PG Tips fruit, herbal and green teas in the UK also boosted turnover in the refreshment category. While the recent announcement of a new social media campaign​ looks set to bring more young female consumers to the category.

Overall, underlying sales growth for Unilever rose by 3.6% in Q1 to €11.4bn (£9.39bn), driven mainly by emerging market growth in South and East Asia of 6.6%.  Turnover in Q1 decreased by 6.3%, which was affected by the strong euro, the results indicated.

“We delivered good growth in the first quarter, despite slowing markets and a tough competitive environment, further evidence that Unilever is now delivering consistently ahead of our markets,” ​said Polman.

Good growth in Q1

“We continue to invest in our brands so that they are well-placed to benefit from the significant longer term growth opportunity that will come from growing populations and higher disposable incomes.”

Meanwhile, Unilever also confirmed today (April 24) that it was reviewing its options for the future of its US SlimFast and North Amercia pasta sauce businesses.

The company bought SlimFast in 2000 for £1.4bn. However, sales began to suffer in 2003 and the brand has seen a continued decline in sales.

Unilever recently sold its meat snacks​ business to US beef jerky producer Jack Link’s in February, which included the Peperami and Bifi brands for an undisclosed sum.

“We completed the disposal of the Bifi and Peperami brands during the [Q1] quarter,” ​said Polman.

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