Unilever lifts turnover: helped and hindered by food

By Alice Foster contact

- Last updated on GMT

Unilever highlighted the success of its pink and black Magnums
Unilever highlighted the success of its pink and black Magnums

Related tags: Ice cream

Unilever beat expectations by boosting turnover by 10% in 2015, but warned of “tougher market conditions” and high volatility this year.

The consumer goods giant’s turnover rose to €53bn (£41bn) – ​with its food business both helping and hindering financial performance ​ in the year to December 31 2015.

Underlying sales grew 4.1% and operating profit fell 6% amid the global slowdown, geopolitical instability and currency and commodity volatility, according to Unilever ceo Paul Polman. 

“We are preparing ourselves for tougher market conditions and high volatility in 2016, as world events in recent weeks have highlighted,” ​Polman said. 

‘Drive agility and cost discipline’ 

“Therefore it is vital that we drive agility and cost discipline across our business.”​ 

Shore Capital analysts Clive Black and Darren Shirley described Unilever’s results as a little better than expected with revenue growth “registering a pleasing beat”. 

“In volatile times, these are very reassuring results from Unilever, which we welcome,”​ Black and Shirley said. 

Unilever said its European business returned to growth in 2015 with good volume growth offsetting price deflation across its markets. 

“Home care and ice cream grew strongly ahead of our markets, but the contraction of the margarine market weighed on our foods performance, particularly in the United Kingdom and Germany,”​ the company said. 

‘Gain market share in margarine’​ 

The baking, cooking and spreads unit is repositioning the business to more attractive segments which helped us to gain market share in margarine. 

“However, sales in spreads continued to decline as we were not able to stem the sustained market contraction in developed countries.”​ 

The firm highlighted the success of products such as Knorr cooking sauces with 100% natural ingredients, Hellmann’s squeezy packs and fortified stock cubes to address iron deficiency. 

“Savoury showed good volume-driven growth led by cooking products in emerging markets and by innovations around naturalness and health,”​ the company said. 

Ice cream also delivered growth thanks to innovations such as the pink raspberry and black expresso Magnums and Ben & Jerry’s tubs with ice cream sauce and biscuit cores. 

Unilever has grown its presence in the premium gelato ice cream category with the acquisition of US sorbet maker Talenti and Italian ice cream maker Grom. 

“In leaf tea we reinvigorated the Lipton brand with an improved mix and new packaging but growth was below our markets,” ​the firm said. 

“We extended Lipton and PG Tips further into fruit, herbal and speciality teas where we are still under-represented.”​  

Results at a glance

Food 

  • Core operating profit up €0.1bn to €2.4bn
  • Margin fell 40 basis points (bps) due to higher brand and marketing costs

 Refreshments 

  • Core operating profit up €0.1bn to €0.9bn
  • Margin rose 60bps thanks to ice cream performance 

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