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LONDON — Going forward, Unilever will prioritize beauty, well-being and personal care products, said new chief executive Fernando Fernandez as the consumer giant and parent of brands including Dove, K18 and Nutrafol reported underlying sales growth of 3.4 percent in the first half.
“Looking ahead, our priorities are clear: more beauty and well-being and personal care; disproportionate investment in the U.S. and India, and a sharper focus on premium segments and digital commerce,” Fernandez said in Unilever‘s first-half statement.
“We are building a marketing and sales machine that drives desire at scale in our power brands and ensures execution excellence across all channels, to deliver consistent volume growth and gross margin expansion,” the CEO added.
In the first half, Unilever’s underlying sales totaled 30.1 billion euros, with the 3.4 percent growth marginally higher than analysts’ expectations.
At reported exchange, sales were down 3.2 percent due to the impact of disposals and a negative currency impact, the company said.
Well-being products such as Nutrafol outperformed in the first half of the year.
Underlying operating profit was down 4.8 percent to 5.8 billion euros in the six months to June 30 due to strong comparatives with the corresponding period last year, the company said.
In the second quarter, underlying sales growth accelerated 3.8 percent to 15.4 billion euros. On a reported basis, sales in the three months were down 4.6 percent.
The second-quarter improvement in sales was due to outperformance in developed markets and the positive impact of “decisive interventions” in emerging markets, said Fernandez, who took over the top job earlier this year after the abrupt departure of his predecessor Hein Schumacher.
Unilever shares were up nearly 1 percent to 44.96 pounds following the announcement, but closed down 0.7 percent at 44.25 pounds on Thursday.
Fernandez believes the first-half performance positions the company well for the full year. “In the second half, we expect further acceleration in emerging markets, particularly in Asia, and sustained momentum in developed markets,” he said.
Unilever’s beauty and well-being division generated 21 percent of group turnover in the first half, with underlying sales growing 3.7 percent. Some 1.7 percent came from volume, with 2 percent coming from price.
Growth in the division was led by “continued momentum” in well-being, partially offset by “subdued” growth in beauty, the company said.
K18 grew in the double-digits in the first half of the year.
Within the division, hair care sales were flat. Dove products grew midsingle digit, supported by a “significant relaunch” featuring fiber repair technology and refreshed packaging.
Growth was offset by a decline in the Clear brand, which was impacted by slow market growth in China, and by a volume decline in TRESemmé hair care.
Core skin care delivered low-single-digit growth, with performance varying across brands and markets. Vaseline and Dove both grew in the double-digits, “supported by innovation and strong execution,” according to Unilever.
That growth was partially offset by declines in China and Indonesia, where Unilever said it was “resetting” its business.
Well-being delivered strong double-digit growth for the 21st consecutive quarter, with performance led by Liquid I.V.and Nutrafol. Unilever said both brands continued to expand household penetration and deliver successful multiyear innovations, such as Liquid I.V.’s sugar-free platform.
Prestige beauty was flat as the market remained subdued. Hourglass, Tatcha and K18 continued to grow in the double-digits, while Paula’s Choice and Dermalogica declined.
Underlying operating profit in prestige beauty was 1.3 billion euros, down 3.7 percent versus the prior year as the company increased brand and marketing investment behind key innovations and market development.
Dove Men + Care Whole Body Deodorant line.
Courtesy
The company said its three priorities in beauty and well-being are premiumizing the core hair and skin care portfolios by emphasizing “brand superiority”; fueling the growth of the prestige beauty and well-being portfolios with “selective” international expansion, and, continuing to strengthen competitiveness “through innovation and a social-first approach to consumer engagement.”
As part of its growth drive in beauty and well-being, Unilever opened its first U.S. fragrance lab, located within Unilever’s existing Trumbull, Connecticut Research & Development facility, on July 23.
The lab is part of Unilever’s previously announced 100 million euros global investment to boost its in-house fragrance capabilities. In the U.S., it plans to bring together top perfumers, scientists and developers in a digital-first, collaborative space to accelerate the creation of “unique scent experiences.”
In the first half, sales in Unilever’s personal care division, which represents 22 percent of group turnover, grew 4.8 percent, with 1.4 percent coming from volume and 3.3 percent from price. Dove body deodorants and skin cleansing products drove high-single-digit growth in the six-month period.
Unilever added that its productivity program was ahead of plan with 650 million euros in savings expected by the end of 2025, while its ice cream de-merger is on track.
The public listing of The Magnum Ice Cream Company, a newly formed entity, is set for mid-November in Amsterdam, with secondary listings planned for London and New York.
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