Unilever’s new CEO vows focus on growth as turnover falls

Unilever’s new CEO, Alan Jope, has vowed to focus on “accelerating growth” after the packaged goods giant absorbed a 5% hit to its full-year turnover.

Revenue for 2018 stood at €51 billion – lower than the €53 billion recorded last year – owing to adverse currency impacts and the disposal of its spreads unit at the end of 2017.

But despite the diminished top-line, underlying sales growth without Unilever’s spreads business – which included brands such as Flora and Stork – amounted to 3.1%, while net profit for the year grew 51% to €9.8 billion.

Alan Jope said: “2018 was a solid year for Unilever, with good volume growth and high-quality margin progression. Looking forward, accelerating growth will be our number one priority. With so many of our brands enjoying leadership positions, we have significant opportunities to develop our markets, as well as to benefit from our deep global reach and purpose-led brands.

“We will capitalise on our strengthened organisation and portfolio, and our digital transformation programme, to bring higher levels of speed and agility. Strong delivery from our savings programmes will improve productivity and fund our growth ambitions.

“In 2019 we expect market conditions to remain challenging. We anticipate underlying sales growth will be in the lower half of our multi-year 3–5% range, with continued improvement in underlying operating margin and another year of strong free cash flow. We remain on track for our 2020 goals.”

Foods and refreshments accounted for €20.2 billion of turnover for the year, with the remainder split between beauty and home care products.

Excluding spreads, turnover from foods and refreshments was €18.8 billion, representing underlying sales growth of 2.3% on 2017.

Ice cream enjoyed another strong year, helped by innovation throughout premium brands including a new Magnum praline variant and a non-dairy range of Ben & Jerry’s. The launch of Kinder ice cream and good weather helped to deliver strong ice cream growth in Europe, the company said.

A new line in probiotic ice creams, called Culture Republick, was complemented by innovations across several other brands.

Sales in tea grew modestly: emerging market growth was driven by good performance across core brands like Brooke Bond in India, while in developed markets challenges in black tea offset good growth from Pukka and Unilever’s new organic Lipton range.

In savoury, Knorr was helped by good performance of cooking products in emerging markets and more organic and natural innovations such as a new ‘soup in glass’ range. In dressings, campaigns centred around Hellmann’s purpose to fight food waste helped to increase brand equity, but sales were held back by promotional intensity particularly in the US.

Unilever said its initiative to transform the portfolio are working: strong innovations including Knorr rice and pasta pots as well as its new brands Red Red, PrepCo and Mãe Terra helped to build scale in the fast-growing snacking segment and the company tied up an agreement to buy Horlicks in India, Bangladesh and 20 other markets.

Despite strong portfolio development, the company has endured an eventful 12 months: it came under criticism from shareholders for attempting to make Rotterdam in the Netherlands its sole global headquarters, intending to close down its office in London – possibly an attempt to insulate itself against Brexit – before backing down.

Then, in November, the company announced that long-time CEO Paul Polman would retire and be replaced by Alan Jope, formerly the head of Unilever’s beauty and personal care business – the largest division within Unilever.