Unilever reports progress during third quarter trading

Unilever, the Anglo-Dutch foods and personal care conglomerate, reported good sales growth during its third quarter period, today.

It said underlying sales growth was 2.9%, with volume 1.4% and price 1.5%. Its emerging markets underlying sales growth was 5.1%, with volume 2.2% and price 2.8%.

Turnover during the period increased 5.8% to £11.54bn, which included a positive impact of 2.3% from currency and 0.8% from acquisitions.

In emerging markets growth in India remained stable and competitive in a slowing market. In Latin America, Brazil grew modestly against a strong comparator which included some recovery from the truckers’ strike.

Chief executive Alan Jope said: “We have maintained momentum in the quarter, with a good balance between volume and price.

“Emerging markets and home care have been the key growth drivers.

“We will step-up competitive top line performance through innovation and portfolio evolution to serve the faster growing geographies and channels.”

He added: “We are committed to delivering superior long-term financial performance and balanced, compound growth of the top and bottom line through our sustainable business model.

“We are taking action to remain relevant to the consumer of the future, such as setting stretching goals on plastic use which we recently announced.

“For the full year, we continue to expect underlying sales growth to be in the lower half of our multi-year 3-5% range, an improvement in underlying operating margin that keeps us on track for the 2020 target, and another year of strong free cash flow.”

Port Sunlight, in Wirral, is the centre for Unilever’s home care and personal care research and development, with more than 750 scientists based there.

World famous brands such as Dove, Sunsilk, Rexona, Axe, Domestos, TRESemmé, Comfort, Dirt is Good, Surf and Signal all have Port Sunlight technology inside.

The group has also created a pilot plant at the site that allows it to manufacture prototype shampoos, fabric conditioners, toothpastes, deodorants and laundry liquids.

Unilever says the plant also works with three local strategic partners – The University of Liverpool, Manchester University and Daresbury Laboratory.

Nearby, the group operates a detergents factory in Warrington.

Russ Mould, investment director at Manchester investment firm AJ Bell, said: “Your grandmother might have told you to drink hot tea to cool down on a hot day and maybe this explains why consumer goods giant Unilever has seen sales of brands like PG Tips and Lipton slide as Summer 2019 fails to live up to the 2018 heatwave.

“The comparatively cooler and wetter Summer undoubtedly meant more Ben & Jerry’s ice cream stayed in the freezer.

“This helps explain why third quarter performance was a smidge short of expectations with 2.9% growth and very slightly behind the performance of rival Nestle which also reported today.

“A weak showing for the shares heading into today’s announcement suggests investors were fearing worse.

“Nonetheless, the continuing pressure on sales in developed markets, which fell 0.1%, does reflect the structural challenge facing big brands as more of us look to buy local products which are perceived to have more integrity.

“This leaves the company more and more exposed to emerging markets where growth remains strong.

“Interestingly, Unilever has changed the way it measures underlying sales growth to contend with emerging markets, like Argentina, which are in a hyper-inflationary state.

“Some observers suggest this will flatter the figures and it could reflect the company’s focus on at least getting close to its targeted growth rate of between 3% and 5%.”