A surge in sales of ice cream and personal grooming products helped consumer goods giant Unilever beat off a challenging sales environment in its first-half results.
Unilever beat analyst expectations by posting underlying sales growth of 4.7 per cent, with volume up 2.2 per cent, in the first half of this year. A median estimate of Bloomberg analysts had put growth at 4.5 per cent.
However, turnover actually fell 2.6 per cent to €26.3bn (£20bn) and total operating profit fell 0.1 per cent to €3.8bn. Pre-tax profits came in at €3.6bn, a small 0.8 per cent rise on last year.
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Emerging markets grew eight per cent, driven by good volume growth in Asia and price growth in Latin America, while developed markets grew 0.2 per cent with volume growth "more than offsetting price deflation in Europe".
Diluted earnings per share rose one per cent to €0.88.
The company's share price was down 0.7 per cent in afternoon trading to 3,550p.
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Why it's interesting
Unilever splits its consumer goods into four categories: Food, Home Care, Personal Care and Refreshments.
The company said revenues were especially driven by the Food and Personal Care categories, which "achieved improved growth while maintaining profitability".
However, in the company's Refreshments segment, premium ice cream brands Magnum, Ben & Jerry's and Carte D'Or all excelled, while Lipton and PG Tips benefited from extending into the "faster-growing" green and specialty teas segments, where the company has said it is "under-represented".
In the Personal Care category, deodorants and shampoos including TRESemme and Sunsilk performed strongly.
Unilever also said it was "addressing the higher growth male grooming segment" by launching a new Ace range. The company made it clear it is taking the male grooming product sphere seriously yesterday when it announced the surprise acquisition of US-based subscription startup Dollar Shave Club for a reported $1bn.
What Unilever said
Chief executive Paul Polman said:
Despite a challenging environment with slower global economic growth and intensifying geopolitical instability, we have again grown profitably in our markets, competitively and driven by strong innovations.
We have been preparing ourselves for tougher market conditions in 2016 and do not see any sign of an improving global economy.
Against this backdrop we continue to drive agility and cost discipline, implementing the key initiatives announced at the end of last year: net revenue management, zero based budgeting and "Connected 4 Growth" which is the next stage in our organisational transformation. Our priorities continue to be volume-driven growth ahead of our markets, steady improvement in core operating margin and strong cash flow.
What others said
Pinar Hosafci, senior food analyst at Euromonitor International said: “Ice cream is by far the most important packaged food category for Unilever, and is one that the company actively invests in. The company should specifically focus on expanding Magnum and Ben & Jerry’s in the impulse channel, and promote Cornetto as a value-for-money product.”
Ice cream and personal care products boosted Unilever's first-half results, while its investments in male grooming especially bode well for the rest of the year.