Unilever sales boosted by emerging markets and price rises

Unilever delivered underlying sales growth of 3.1% in the first quarter of 2019, thanks largely to the growth of its business in emerging markets and price increases, though this did not prevent a revenue fall during the quarter.

Unilever – which owns major food and drink brands such as Magnum, Marmite and Hellman’s – registered revenues of €12.4 billion during the quarter, a fall of 1.6% when compared to last year’s figure of €12.6 billion.

The company attributed this fall to the continued impact of the disposal of its spreads business, which was agreed at the end of 2017 and was completed in July 2018.

Most of the underlying sales growth during the quarter was delivered by price increases rather than volume growth, with roughly two-thirds of sales growth delivered by price rises.

Markets such as Brazil and South East Asia helped the company’s Emerging Markets unit deliver sales growth of 5% in the quarter, though the company stated that “growth remains
weak in the developed markets.”

Net revenue registered by the company’s Food & Refreshments division fell 12.3% to €4.52 billion, despite the fact that the division’s underlying sales grew 1.5%.

The company claims that its efforts to modernise its food and drink portfolio to keep up with consumer preferences towards organic, natural, healthy and on-the-go products “are working.” Unilever said that its portfolio of snack pots, bouillons and the Knorr brand’s new range of high-protein and high-fibre soups in Turkey all performed strongly during the quarter.

Innovation in the ice cream segment also stimulated growth, with the rollout of Kinder ice creams across Europe and portfolio expansions from its Magnum brand providing a boost.

Unilever’s new CEO Alan Jope vowed at the start of the year that the company would focus on “accelerating growth” following a 5% hit to its full-year turnover in 2018, and he claimed that the company was on track to achieve this in 2019.

Unilever’s chief executive officer Alan Jope said: “We have delivered a solid start that keeps us on track for our full-year expectations. Growth was led by emerging markets and was balanced between volume and price.

“Accelerating growth is our number one priority. It requires both great execution and a continued strategic shift into faster growth segments and channels.

“We saw good performance in key growth channels including out of home and e-commerce and benefited from stronger global innovations and faster and more relevant local innovation.

“The acquisitions we have made since 2015 collectively grew double-digit in the first quarter. With the leadership changes
announced in March, we are building the right team to drive our growth agenda.

“For the full year we continue to expect underlying sales growth to be in the lower half of our multi-year 3% – 5% range, an improvement in underlying operating margin that keeps us on track for the 2020 target and another year of strong free cash flow.”