Emerging markets boost Unilever sales

By Rick Pendrous

- Last updated on GMT

Magnum sales exceeded €1bn
Magnum sales exceeded €1bn

Related tags Unilever

Food manufacturing and consumer goods giant Unilever has demonstrated skill in navigating choppy global waters by delivering a solid performance in its fourth quarter results to December 31, with sales up by 10.5% to €51.3bn and profits up by 7% to €4.9bn.

The maker of Magnum ice cream and Knorr soup reported increased sales with double-digit growth in emerging markets. Although its business in Europe proved more difficult, demand in the UK and France was reported to be particularly strong, although hit by rising commodity costs.

Overall the group reported weak growth in food in the fourth quarter, which was in part due to difficult markets. Its spreads business saw a decline in sales although its volume shares improved in response to the action it took. Unilever conceded that it had more to do to drive category growth.

'Solid results'

Unilever's dressings business continued to perform well, despite increased competition. And, despite sluggish growth in its core savoury business, new product development continued to perform well. Its Food Solutions business, serving professional chefs, delivered "solid results despite challenging developed markets"​, underpinned by double digit growth in key emerging markets.

Ice cream saw double-digit growth in the quarter, primarily driven by volume. Magnum completed a successful year by passing the 1bn milestone.

Beverages growth continued to improve in the quarter with Lipton progressing well. India delivered a strong performance on Brooke Bond with double-digit growth in both the premium and value segments of the market.

In a statement, chief executive Paul Polman said: "Emerging markets again contributed double-digit growth, helping us to exceed 50bn turnover an important milestone in our journey to double the size of Unilever from 40bn to 80bn, while reducing our environmental impact.

'Tough economic conditions'

"These results have been achieved in tough economic conditions, with volatile commodity costs and in an intensely competitive environment."

The results were well received by City analysts. Shore Capital's Darren Shirley said Unilever was "well placed to deliver further steady and sustainable margin expansion through 2013"​, with its focus on emerging markets and cost cutting strategies.

Martin Deboo at Investec Securities said Unilever's results had beaten expectations on its organic growth and core margins. However, he urged caution going forward, suggesting that the group's input and restructuring costs and benefits, together with its promotional investments needed to be closely scrutinised in 2013.

Meanwhile, Unilever UK has achieved 100% zero waste to landfill and brought its global zero waste to landfill commitment forward five years to 2015, with more than 50% of all of its factories sending no waste to landfill in 2012.

Unilever's group environmental engineering manager Tony Dunnage said: "This is a significant achievement for Unilever as we make progress towards reaching our ambitious sustainability goals. It's a great example of how we are putting our sustainability strategy into action by decoupling the growth of our business from its environmental impact."