Unilever announced its results for the first half of 2021, which show a strong performance, with underlying sales growth of 5.4% driven by its continued focus on operational excellence.
Unilever recorded an underlying sales growth of 5.4%, with 4.0% volume and 1.3% price. Price growth stepped up in Q2 while the company’s turnover increased 0.3% including a positive impact of 1.4% from acquisitions net of disposals and negative impact of 6.1% from currency-related items.
Emerging markets grew 8.3%, driven by continued recovery in China and strong performance in South Asia, both growing double-digit. Performance in South East Asia was mixed, with Indonesia declining high single-digit. Latin America grew high single-digit, led by price growth. Developed markets grew 1.5%, as North America and Europe each grew low single digit.
In North America, food solutions and Prestige Beauty contributed to growth as the out-of-home eating and health and beauty channels reopened. Unilever saw a relative decline in food consumed at home and flat growth in hygiene products, as it lapped the spike in demand in the prior year.
In Europe, volume growth was supported by a recovery in out-of-home ice cream. Price declined in Europe as it lapped a period of lower promotional intensity in some markets. Ecommerce grew 50% and is now 11% of sales.
The company’s underlying operating margin of 18.8%, a decrease of 100bps driven by investment behind our brands and input cost inflation. Also, underlying earnings per share down 2.0%, including a negative impact of 6.3% from currency while free cash flow of €2.4 billion, compared to €2.9 billion in the first half of 2020. Similarly, the quarterly shareholder dividend of €0.4268 per share and share buyback programme of up to €3 billion is underway.
Turnover increased 0.3% including a positive impact of 1.4% from acquisitions net of disposals and a negative impact of 6.1% from currency-related items.
A statement from CEO Alan Jope
“Unilever has delivered a strong first half, with underlying sales growth of 5.4% driven by our continued focus on operational excellence.
We are making good progress against the strategic choices outlined earlier this year, including the development of our portfolio into high growth spaces. Prestige Beauty and Functional Nutrition grew strongly, and we recently announced the acquisition of digitally native skincare brand Paula’s Choice.
The operational separation of our Tea business is substantially complete. Our eCommerce business grew 50% and the channel now represents 11% of sales.
Competitive growth is our priority, and we are confident that we will deliver underlying sales growth in 2021 well within our multi-year framework of 3-5%, despite more challenging comparators in the second half.
We have seen further cost inflation emerge through the second quarter. Cost volatility and the timing of landing price actions create a higher-than-normal range of likely year-end margin outcomes. We are managing this dynamically and expect to maintain an underlying operating margin for 2021 around the flat.”
Beauty & Personal Care
Beauty & Personal Care underlying sales grew 3.3% with 1.8% from volume and 1.4% from price, with an acceleration to 4.2% underlying sales growth in the second quarter, helped by increased personal care consumption occasions as living restrictions were eased in some of our markets.
Skincare grew double-digit and deodorants returned to growth. In skincare, Vaseline and Ponds each grew double-digit. Unilever launched Dove’s refillable deodorant innovation in the US, one of many Dove projects exploring sustainable packaging solutions.
Skin cleansing declined as it lapped the sharp increase in demand in the prior year related to Covid-19. Hair grew mid-single digit. Wash and care and styling both grew, and the company saw good growth in China, India and Brazil. Premium brand Shea Moisture grew double-digit in the US.
Oral care grew mid-single digit, led by volume from South Asia and Africa. Closeup’s freshness innovation is driving growth in Brazil. Our Prestige Beauty brands grew double-digit, with higher in-store footfall. Unilever increased pricing in response to commodity inflation across categories, particularly in Latin America and South Asia.
Home Care underlying sales grew 4.5% with 4.8% from volume and a negative price of 0.3%. Fabric cleaning grew mid-single digit driven by a recovery in India and price-led growth in Brazil. In Latin America, growth was helped by our Omo dilutable laundry liquid innovation, which launched in 2020.
Fabric enhancers grew mid-single digit led by China, where our Comfort fragrance boosters innovation with dual-colour beads and luxury-inspired fragrances performed well. Home & hygiene declined low single-digit. There was good growth in dishwash in emerging markets, while household cleaners declined as it lapped a prior year spike in growth.
We expanded our Lifebuoy brand into home hygiene products in the UK and Germany, launching the new BotaniTech range of cleaning products with naturally derived ingredients.
Price declined overall as it lapped a period of lower promotional intensity in some markets and as the impact of rising input costs was more muted in fabric cleaning through the first half. Pricing was slightly positive in the second quarter as the company started to take pricing action in markets including Brazil and Turkey to respond to rising input costs.
Foods & Refreshment
Foods & Refreshment underlying sales grew 8.1% with 5.8% from volume and 2.1% from the price.
Ice cream sales grew across both in-home and out-of-home products, with double-digit performances in Turkey, China and India. Out-of-home ice cream in Europe grew double-digit as living restrictions began to ease, although sales have not returned to pre-Covid-19 levels. Magnum and Ben & Jerry’s both grew double-digit.
Magnum launched the Miley in Layers campaign with Miley Cyrus. Ben & Jerry’s has seen innovation success with its ‘Topped’ product range, with larger chunks and unique patterns and layers.
Food solutions grew double-digit. Sales in China were above pre-Covid-19 levels, however in most other markets, turnover has not yet recovered to 2019 levels as out-of-home channel restrictions remained in place. In-home foods grew low single-digit even as the company lapped a spike in demand in the prior year.
Knorr and Hellmann’s grew double-digit led by volume with campaigns such as Make Taste Not Waste by Hellmann’s and the rollout of innovations such as Knorr’s flavour rich, low salt bouillon. Unilever took pricing action across food and ice cream to counter rising input costs.
Tea grew high single-digit through both price and volume, with growth in North America, Turkey, Europe and India. Price was driven by India, following significant raw material inflation.