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Unilever's emerging-markets1 strategy is starting to deliver solid results
7:00AM BST 26 Oct 2012
| Despite the challenging market backdrop2, Unilever's strategy looks like it is working. Focusing on growth in emerging economies is boosting both the sales and profit – and the consumer products giant smashed expectations in the 3rd quarter of the year. Shares in the Anglo-Dutch group hit an all-time3 high yesterday, following a particularly strong performance in Brazil. The company is no stranger to developing markets, having more than 50 years' experience in Brazil, China, India and Indonesia. It has been focusing on serving the "next billion consumers" that are to be found in these and other territories4. The strategy involves launching products such as its Magnum ice creams, into new markets to capture growth, which should compensate for sluggish5 sales in developed markets. Indeed, Magnum was successfully launched in the Philippines and Malaysia during the last quarter and the brand continues to do well in the US and Indonesia. The Magnum category alone is now generating €1bn (£804m) of sales. For the group as a whole, 3rd-quarter underlying sales grew 5.9% to €13.4bn on a year-on-year6 basis. This was ahead of a consensus7 view of 5.3%. Underlying figures strip out8 movements in foreign exchange and recent M&A9. Volumes, or the amount of items sold, rose 3.4% compared with expectations of 2.5%. In the 3 months to September, emerging-market sales rose 12% and now make up 55% of the total. Unsurprisingly, Europe was weak, with improved volumes offsetting10 weaker prices to deliver 0.9% underlying sales growth. This was better than expected. The news follows an upbeat11 report from Reckitt Benckiser this week, which beat expectations and also saw its shares propelled12 to an all-time high. This was also helped by emerging-market exposure, with both sets of results following disappointing statements from the French group Danone, which is heavily exposed to Europe. Switzerland's Nestlé also reported a slowdown in sales growth in emerging markets last week, so both UK listed groups have turned in a creditable performance. Unilever's personal-care segment, which includes Lynx deodorant13 and the Brylcreem hair product, saw sales growth of 8%. This was achieved by a 45.6% increase in volumes and 2.3% increase in prices. This is a very profitable unit. Last year, it generated 33% of sales and 39% of operating profit with an operating margin of 18%. It is good to see solid progress here. However, the home-care unit has been a recent star performer, with sales growth in the quarter hitting 11%, comprised14 of a 7% increase in the number of items sold and a 3.8% increase in pricing. However, this category, which includes household cleaner Cif and Comfort fabric conditioner, is not as profitable as personal care. Last year, it generated 18% of turnover15 and 7% of profit on an operating margin of 6.9%. For the group as a whole, Unilever said yesterday that it remained on track to deliver a modest improvement in operating margin, which last year came in at 14.9%. These numbers, in a challenging period, demonstrate that the group's emerging market strategy is on track. |
1 emerging-market: 新興市場 2 backdrop: 背景 3 all-time: 前所未聞的 4 territories: 領土、領域 5 sluggish: 遲滯、緩慢的 6 year-on-year: 去年同期的 7 consensus: 共識 8 strip out: 剔除 (strip: 剝) 9 M&A: Mergers and Acquisitions (企業)併購 10 offset: 抵銷 11 upbeat: 樂觀的、看好的 12 propel: 推進 13 deodorant: 除臭劑 14 comprise: 包括 15 turnover: 營業額 |
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