Unilever's fourth quarter sales grow 7.8%

Wednesday 23 January 2013 09.32
Unilever seeing strong demand in developing economies
Unilever seeing strong demand in developing economies

Unilever, the maker of consumer products such as Dove soaps and Magnum ice cream, said that sales rose 7.8% to €12.6 billion in the fourth quarter.

This came on the back of strong demand in developing economies.

Along with the fourth quarter figures, Unilever's full year net profit was up 4.5% to €4.25 billion, on sales that were 10.5% higher to €51.3 billion.

It said it improved full year profit margins by 0.3 percentage points to 13.8%, despite higher commodity costs, by hiking prices, cutting costs, and selling more higher-margin products. 

The margin improvement is impressive for a company with Unilever's size, especially amid a weak global economy, analysts said.

Chief executive Paul Polman said that in 2013 the company is targeting "another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow."

Sales figures for the fourth quarter clearly showed the skew between economies, with growth of 11% in developing countries, compared with only 4% in mature economies. In Europe, fourth quarter sales were up 0.2%, as selling prices fell but volumes grew slightly more.

Among product categories, the standout continued to be Unilever's personal care division, where sales increased 12%, with over 7% of that due to volume growth.

The company said it is benefitting from recent acquisitions, as it uses its marketing muscles to increase sales of brands such as hair product Tresemmme. Unilever said the brand performed very well in Brazil, and has been rolled out in India and Indonesia, where it will have room to grow.

Unilever also owns Axe, Rexona and Sunsilk, a brand which passed €1 billion in sales for the first time last year.

The company said it saw strong growth at its refreshments division, which includes Lipton tea and Magnum ice cream, another brand that passed a billion in full-year sales.

"Ben & Jerry's also performed well although we saw intense competition in take home ice cream, particularly in the US," the company said.

Unilever said its weakest category was foods, where it sells Knorr soups, Hellmann's mayonnaise and Becel spreads, among others.

The company also said that demand for spreads was weak and the company was forced to lower prices, while competition is fierce in other areas, and it is being forced to invest heavily in advertising, hurting margins.