Unilever has released its results for the first half of 2023 (H1), reporting that its underlying sales growth has been “particularly strong.“
Emerging markets grew underlying sales by 10.6%, with price being at 10% and a return to positive volume growth at 0.6%. Latin America delivered 16.3% underlying sales growth with price moderating and volume up 1.6%. South Asia saw double-digit growth through price and some volume, driven by India.
There was also growth in China, with improved volumes following the lifting of pandemic-related restrictions. Unilever said that growth in South East Asia was muted due to a sales decline in Indonesia, while Turkey delivered strong volume growth in a continued hyper-inflationary economy.
After several periods of high cost inflation, gross margin remains 270 basis points (bps) below its level at H1 2019. Brand and marketing investment stepped up by €0.4 billion in constant exchange rates, a 30 bps increase as a percentage of turnover in current exchange rates.
Nutrition category sees growth, with helping hand from Hellman’s
Nutrition underlying sales grew 10.4% with 12.6% from price and -1.9% from volume. Scratch Cooking Aids (sauces, dressings, meal kits, etc.,) saw high single-digit growth. The category’s growth was price-led with negative volume, particularly in Europe and North America.
Dressings continued double-digit growth with Hellmann’s driving sales during the Easter and BBQ season, combining the “make taste, not waste” campaign with innovation such as spicy mayonnaise in the United States. Unilever Food Solutions also accelerated its double-digit growth through the first half with China’s market returning to double-digit growth in the second quarter.
Underlying operating margins increased by 80bps, mainly driven by a reduction in overheads, partially offset by lower gross margin as a result of continued input cost inflation.
On 14th June 2023, Unilever announced the acquisition of Yasso Holdings, Inc., a premium frozen Greek yoghurt brand in the United States.
Ice cream sales increase despite inflationary environment
Underlying ice cream sales grew 5.8%, with 11.5% from price and -5.2% from volume.
In-home ice cream received low-single digit growth as volumes continued to be impacted by lower consumption. Unilever said that this was due to the discretionary nature of the category in an inflationary environment.
Out-of-home ice cream grew double-digit with positive price and positive volume. In Europe, poor weather in April and May was largely offset by good weather in June.
Magnum saw high single-digit growth with the Starchaser and Sunlover limited edition product performing well. In North America, Unilever launched Talenti mini gelato and sorbetto bars, and the Heart brand grew mid-single digit, supported by a new plant-based variant under the Twister range.
Optimism as Unilever looks towards H2
Unilever said it is aiming for another year of strong underlying sales growth, and expects to see a 5% increase in sales growth for 2023, with underlying price growth continuing to moderate through the year.
Hein Schumacher, CEO of Unilever, said: “Unilever’s performance in the first half highlights the qualities that attracted me to the business: an unmatched global footprint, a portfolio of great brands and a team of talented people.
“My early immersion in the business has confirmed my belief in Unilever’s strong fundamentals. The task ahead is to leverage these core strengths – supported by our simplified operating model – to drive improved performance and competitiveness. This is our absolute priority and it will mean bringing greater focus and sharper execution, with science-backed innovations and investments behind our brands.
“This opportunity to step up our performance and unlock our full potential makes it an exciting time to lead Unilever. I look forward to sharing further details when we report our Q3 results in October.”
