Unilever delivers strong growth in first-half 2011

Underlying operating margin for the half-year was down 20 bps** with the impact of high input cost inflation offset by pricing and savings. Stepped-up continuous improvement programmes generated efficiencies in advertising and promotions, leading to lower indirect costs.

Advertising and promotional spend, at around €3 billion, was higher than the second-half of 2010 but was down 150 bps against last year’s exceptionally high figure.

Commenting on the company’sstrongest growth since the third quarter 2008, CEO Paul Polman said: “We are making encouraging progress in the transformation of Unilever to a sustainable growth company. Volumes were robust and in line with the market, despite having taken price increases. This shows the strength of our brands and innovations.”

Categories

Home Care and Ice Cream & Beverages delivered underlying sales growth in the first-half of 6.7% and 6.4% respectively. Personal Care followed at 5.5% and Savoury, Dressings & Spreads at 5.0%.

Regions

Asia Africa CEE: Half-year underlying sales growth was 9.0% with underlying volume growth at 5.0% and underlying operating margin down 90bps. The region continued to grow ahead of the markets in the second quarter despite the impact of increased competitor activity. This growth was delivered in spite of the Japanese earthquake and uncertainty in the Middle East.

Americas: Half-year underlying sales growth was 5.3% with underlying volume growth at 0.3% and underlying operating margin up 20bps. Growth in North America picked up in the second quarter with an improved performance from Savoury, Dressings & Spreads. Latin America grew at just under 10% with Argentina and Mexico performing particularly well.

Western Europe: Half-year underlying sales growth was 1.3% with underlying volume growth at 0.2% and underlying operating margin up 50bps. While the markets remain challenging, first-half results taken as a whole reflect the underlying performance of the business with volumes broadly stable. There were notably good performances from Germany and France in the second quarter while Spain and Greece both showed improved performance, delivering positive underlying volume and price growth.

In summing up, Paul said: “Bigger and better innovation rolled out faster and moving our brands into white spaces continue to be the biggest drivers of growth. More so than ever, in today’s volatile environment, our number one priority is to ensure that our brands are managed for the long-term health of the business.”

Watch an interview of Paul in which he responds to questions on the results.

*Underlying sales growth is calculated by excluding the effect of acquisitions, disposals and currency movements.

**100 basis points = 1%.