UK | Unilever just announced the results for the first half of 2024.
Hein Schumacher, CEO, said Unilever was focused on driving high-quality sales growth and gross margin expansion, led by its Power Brands.
“Underlying sales grew 4.1 per cent, driven by a third consecutive quarter of positive, improving volume growth, while pricing continued to moderate in line with our expectations. Gross solid margin progression fuelled increased investment behind our innovations, resulting in a profitability step up,” said Schumacher.
“We continue to embed the Growth Action Plan, doing fewer things, better and with more significant impact. Implementing a comprehensive productivity programme and the separation of Ice Cream is vital to delivering on that commitment, and we are progressing at pace.”
The underlying operating margin for the entire year is expected to be at least 18 per cent, with increasing investment behind brands. The strong gross margin progression in the first half has reflected positive contributions from volume leverage, mix, and net productivity. However, factors that will not repeat in the second half include a low prior-year comparator affected by high input costs and carry-over pricing from higher inflation.
Unilever’s Power Brands performed strongly, with 5.7 percent underlying sales growth, driven by four percent volume growth in H1. Other brands also saw a sequential volume improvement to -1.1 percent in Q2, up from -2.0 percent in Q1.
Beauty & Wellbeing's underlying sales increased by 7.1 percent, and volume growth was 5.5 percent, driven by continued double-digit growth from the combined sales of Health & Wellbeing and Prestige Beauty.
In Q2, robust growth in Health and wellbeing more than offset softer growth in Prestige, which reflected a slowdown in the US beauty market. Personal Care grew by 5.6 percent, with 2.9 percent from volume, led by continued strong sales growth of Deodorants.
Home Care's underlying sales increased by 3.3 percent, with 4.6 percent volume growth, more than offsetting the negative price growth linked to commodity cost deflation in some emerging markets.
Nutrition grew underlying sales by 3.2 percent, driven by price and flat volume for the first half. Nutrition returned to positive volumes in Q2 at 0.4 percent, up from -0.4 per cent in Q1.
Ice Cream continued to focus on operational improvements. Underlying sales growth was 0.6 percent, with volume down -1.0 percent, driven by weak sales in China and a softer start to the summer season in Europe.
Emerging markets (59 percent of Group turnover) grew underlying sales by 5.1 percent, with 3.8 percent from volume and 1.3 percent from price. India grew 1.2 percent, with more substantial volumes partially offset by price.
Lower input costs led to negative prices, while volumes in India sequentially improved throughout the first half, reaching 3.8 per cent in Q2. Latin America grew 8.8 per cent, with continued strong volume growth across the region. Africa and Turkey delivered broad-based, double-digit growth driven by solid volume and price.
Growth in Southeast Asia was adversely impacted by a sales decline of -5.7 percent in Indonesia, where some consumers avoided the brands of multinational companies in response to the geopolitical situation in the Middle East. China declined mid-single digits due to market weakness across all categories apart from food service.
Developed markets (41 percent of Group turnover) grew underlying sales by 2.8 percent, 0.8 percent from volume and 2.0 percent from price. The return to positive volume growth reflected a continued resilient performance in North America and a marked volume improvement in Europe, up 2.2 percent in Q2.
“Accelerating gross margin is a key focus for the business. We started to rebuild gross margin in the second half of 2023, with an improvement of 330bps and continued that momentum into the first half of 2024. The first half improvement reflects positive contributions from volume leverage, mix and net productivity but also factors that will not repeat in the second half, such as a low prior year comparator affected by high input costs and carry-over pricing from a period of higher inflation.”
In March, Unilever announced the separation of Ice Cream and the launch of a significant productivity programme to strengthen the company and substantially improve efficiency and effectiveness. Separation activity is underway and on track to completion by the end of 2025.
Unilever continued to reshape its portfolio, acquiring K18, a premium biotech hair care brand, in February and completing the disposal of Elida Beauty in June. In July, it announced agreements to sell its water purification businesses, Pureit, to A.O. Smith and its stake in Qinyuan Group to Yong Chao Venture Capital Co., Ltd. The deals are expected to be completed in the year's second half.
In Beauty and wellbeing, Unilever focused on three key priorities: elevating its core Hair Care and Skin Care brands to increase premiumisation, fuelling the growth of Prestige Beauty and Health and wellbeing with selective international expansion, and strengthening its beauty and wellbeing capabilities.
Hair Care delivered mid-single-digit growth with positive volume and price. Its largest hair care brand, Sunsilk, grew double-digit, supported by combing cream innovations across Latin America and the continued success of its 2023 relaunch.
Dove grew high-single digit led by volume growth following the launch of Scalp + Hair Therapy for improved scalp health and hair density. Clear and TRESemmé grew well with the continued expansion of our patented anti-dandruff shampoo and our new Lamellar Shine range.
Core Skin Care grew mid-single digits, with solid volume growth in top brands. Vaseline grew strong double-digits, supported by its premium ranges, including Radiant X and Gluta Hya, which continue to be rolled out to new markets. Pond’s continued to deliver high-single-digit growth, led by volume, following its 2023 relaunch.
Liquid IV grew double-digit with its sugar-free variant's continued success, the launch of new flavours supported by prominent social media campaigns, and ongoing international roll-out.
Olly and Nutrafol contributed double-digit volume growth. In H1, Nutrafol extended into skincare with a daily supplement designed to address the root causes of acne. Olly drove good growth in China, supported by its focus on female health supplements. Tatcha and Hourglass grew double-digit, while the market slowdown affected Paula’s Choice.
Personal Care was focused on winning with science-led brands. Deodorants continued to deliver double-digit growth, with high-single-digit volume growth led by Europe and Latin America.
Skin Cleansing grew low-single digits with positive volume and price growth. Growth was tempered by deflation in India and market challenges in Indonesia.
In-home care focuses on delivering to consumers who want superior products that are sustainable and of great value. Fabric Cleaning grew low-single digit with low-single-digit volume and negative price.
Growth was supported by the launch of Persil Wonder Wash, with patented Pro-S technology, the first-ever detergent designed for short-cycle washes. This significant innovation has now been introduced in the UK, France and China and is on track to be rolled out to other key markets over the next 18 months.
Europe grew double-digitally with strong volumes. India and Brazil grew volume while prices declined, reflecting commodity deflation, notably in the powders portfolio.
In H1, Unilever expanded Domestos Power Foam to new markets and extended the range to include specialist solutions with long-lasting fragrance and limescale removal. Cif's strong performances across Latin America in its cream and sprays portfolio supported it.
Fabric Enhancers grew, supported by the launch of new Botanicals and Elixir ranges. Our patented CrystalFresh technology delivers ten times more fragrance.
Power Brands, including Knorr and Hellmann's, which represented nearly 65 percent of Nutrition turnover, grew by 5.2 percent. Scratch Cooking Aids grew mid-single digit with positive volume and price, led by Knorr. Growth was supported by double-digit performance in Latin America, where Knorr’s innovation and marketing focus on local top dishes continues to drive growth across the portfolio.
Hellmann’s grew in mid-single digits with the continued strong performance of flavoured mayo, which launched in additional markets and added new variants in North America and Europe. Brazil grew double-digits, enhanced by strategic partnerships, including Unilever’s second year as a sponsor of the National Basketball Association in Brazil.
Unilever Food Solutions grew in the high single digits with mid-single digit volume, led by double-digit growth in China. Growth was driven by the latest edition of Future Menu’s Trend report, which sparked inspiration, sales in professional kitchens, and continued gains from THE digital selling programme.
“In March, we announced the planned separation of Ice Cream, which we expect to be completed by the end of 2025. The separation will create a world-leading business, operating in a highly attractive category with five of the top ten selling global ice cream brands.”
Ice Cream had a disappointing start to its critical season, with underlying sales up 0.6 per cent. 1.6 per cent underlying price growth was partially offset by a negative volume of -1.0 per cent.
“Performance remains below our ambition, having been impacted by a soft start to the European critical season and challenging market dynamics in China. In-home Ice Cream delivered flat price and volume, while out-of-home Ice Cream grew low-single digits driven by price.”
Wall’s grew mid-single digits with positive volume and price, Ben & Jerry’s was slightly up, while Cornetto sales were adversely affected by the decline in China. Magnum launched its new ‘Pleasure Express’ range with three variants: Euphoria, Wonder, and Chill.
The underlying operating profit was €0.7 billion, flat compared to the prior year. Key commodity cost inflation continued, driven by cocoa and sugar.
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