July 26, 2022
(press release)
–
Statement from
Key Highlights: * Underlying sales growth in the first half was 8.1% with 9.8% from price and (1.6)% from volume. Growth was broad-based across all Divisions. * Price has sequentially stepped up over the past two quarters, reaching 11.2% in the second quarter, which had, as expected, some negative impact on volume. * This was more pronounced in Home Care, which was particularly exposed to rising input costs and took the highest pricing action, leading to underlying sales growth of 10.7%. * Beauty & Personal Care grew 7.5%, driven by price and continued strong growth in Prestige Beauty and Health & Wellbeing, which is Unilever’s vitamins, minerals and supplements business. * Foods & Refreshment grew 7.3% with slightly negative volume at (0.9)%, although volumes were flat excluding ekaterra. Original Press Release:
- Today, we announced our results for the first half of 2022 * Underlying sales growth of 8.1%, with 9.8% price and (1.6)% volume * Turnover increased 14.9%, including a currency impact of 5.6% * Underlying operating margin of 17.0%, a decrease of 180bps driven by input cost inflation * Underlying earnings per share up 1.0%, including a currency impact of 4.9% * The billion+ Euro brands, accounting for more than 50% of Group turnover, grew 9.4% * €750 million share buyback tranche completed on 22 July, intention to launch second tranche in third quarter Statement from
Source:
[Category: Retail, Financial Results]
“Unilever has delivered a first half performance which builds on our momentum of 2021, despite the challenges of high inflation and slower global growth. Underlying sales growth of 8.1% was driven by strong pricing to mitigate input cost inflation, which, as expected, had some impact on volume. We are now raising our sales guidance for the year. Underlying operating margin was on track at 17% for the first half.
“We have made further progress against our strategic priorities. We are maintaining strong investment in our brands, supporting 9.4% underlying sales growth in our billion+ Euro brands. eCommerce sales now represent 14% of turnover, up from 6% in 2019. Of our three priority markets, the
“Our simpler, more category-focused organisation came into effect as planned on 1 July. This major change to Unilever’s operating model is an important further step that will underpin the delivery of consistent growth, which remains our first priority. The challenges of inflation persist and the global macroeconomic outlook is uncertain, but we remain intensely focused on operational excellence and delivery in 2022 and beyond.”
Outlook
Our guidance for underlying sales growth in 2022 was previously at the top end of a range of 4.5% to 6.5%. We now expect underlying sales growth to be above that range, driven by price with some further pressure on volume.
We expect net material inflation for the year to remain high at around €4.6 billion with our forecast for the second half largely unchanged at around €2.6 billion. We will continue to invest in the health of our brands. In the first half, we increased absolute brand and marketing investment, and we will again invest competitively in marketing, R&D and capital expenditure in the second half. Our full year underlying operating margin expectation remains at 16%, which is within our guided range of 16% to 17%.
The medium-term macroeconomic and cost inflation outlooks are uncertain and volatile, but delivering growth remains our first priority. Against this backdrop, we continue to expect to improve margin in 2023 and 2024, through pricing, mix and savings.
Our market context
High input cost inflation has been widespread across our markets, and it is expected to remain elevated in the second half. While Covid-19 restrictions have been eased in most markets, the lockdown in
In the majority of markets in which we operate, market growth was driven by price which had an impact on market volumes. Food service and out-of-home ice cream channels benefitted in markets which reopened after lockdowns in the prior year, although tourism has not yet returned to pre-Covid levels.
Underlying sales growth in the first half was 8.1% with 9.8% from price and (1.6)% from volume. Growth was broad-based across all Divisions. Price has sequentially stepped up over the past two quarters, reaching 11.2% in the second quarter, which had, as expected, some negative impact on volume.
This was more pronounced in Home Care, which was particularly exposed to rising input costs and took the highest pricing action, leading to underlying sales growth of 10.7%. Beauty & Personal Care grew 7.5%, driven by price and continued strong growth in Prestige Beauty and Health & Wellbeing, which is Unilever’s vitamins, minerals and supplements business. Foods & Refreshment grew 7.3% with slightly negative volume at (0.9)%, although volumes were flat excluding ekaterra. Ice cream out-of-home and
Emerging markets grew by 10.0% with a 12.1% contribution from price and volume at (1.8)%, including an estimated adverse impact of around 70bps from the lockdowns in
Turnover increased 14.9% to €29.6 billion, which included a currency impact of 5.6% and 0.6% from acquisitions net of disposals. Underlying operating profit was €5.0 billion, up 4.1% versus the prior year. Underlying operating margin declined by 180bps to 17.0%. Gross margin decreased by 210bps which reflected the very high inflation in input costs that was only partially mitigated by the strong pricing action and savings delivery.
Brand and marketing investment was stepped up by €0.2 billion in constant exchange rates, which equated to a 40bps contribution to margin. Overheads increased by 10bps largely due to increased investment in business models with a higher overheads structure.
We completed the announced sale of our global tea business, ekaterra, on
On 23 March, we commenced the first tranche of €750 million of the share buyback programme of up to €3 billion. As at 30 June, total consideration for the repurchase of shares was €648 million. This tranche completed on 22 July. It is our intention to launch a second €750 million tranche of our planned share buyback during the third quarter of 2022. This will be confirmed with a launch announcement in due course.
In
Beauty & Personal Care
Beauty & Personal Care underlying sales grew 7.5% with 9.0% from price and (1.3)% from volume. Strong price increases landed across most categories, and were particularly pronounced in
Deodorants delivered double-digit growth, helped by continued premiumisation and strong innovations, such as the 72-hour protection technology launched with Rexona. Skin care grew low single-digit on the back of a strong prior year base, with strong growth of Pond’s in
Overall skin cleansing volumes declined mid single-digit, particularly affected by the pricing in
Underlying operating margin decreased 180bps as gross margin declined as a result of high input cost inflation.
Home Care
Home Care underlying sales grew 10.7% with 14.5% from price and (3.4)% from volume. Double-digit pricing landed across most geographies in response to very high increases in raw material costs.
Fabric cleaning continued its momentum, posting strong double-digit growth with marginal volume decline. The growth was broad-based across all formats, with strong contributions from OMO and Radiant.
Comfort continued its growth momentum in
Underlying operating margin declined 200bps driven by a substantial gross margin reduction partially offset by lower brand and marketing investment.
Foods & Refreshment
Foods & Refreshment underlying sales grew 7.3% with 8.3% from price and (0.9)% from volume. Pricing was broad-based and particularly high in dressings given the input cost increases.
Ice cream underlying sales grew high single-digit driven by strong growth in the out-of-home business which landed double-digit price and volume growth. Magnum and Cornetto continued their growth momentum supported by new variant innovations, while ice cream suffered from supply issues in
Foods also grew high single-digit with slightly negative volumes.
Underlying operating margin decreased 170bps predominantly driven by lower gross margin.
* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.