14th Apr 2016 11:43
LONDON (Alliance News) - Unilever PLC on Thursday reported a fall in revenue in the first quarter of 2016 in a "volatile" market which it said was harmed by negative foreign exchange rates, slowing volume growth and price deflation.
The Anglo-Dutch personal care, food and household products company had warned at the time of its full-year results in January that it would see tougher market conditions and high volatility in 2016.
On Thursday, Unilever said revenue in the first quarter of 2016 slipped by 2.0% to EUR12.5 billion, hit by negative currency movements and slowing volume growth.
Underlying sales, however, grew by 4.7%, meeting the consensus estimate, while underlying volume was up 2.6%. UBS said this signalled a "strong start to the year within tough markets".
In 2015, Unilever achieved 4.1% growth in full-year underlying sales, slightly ahead of its 2% to 4% guided growth range. The third quarter saw 5.7% growth and the fourth quarter delivered 4.9% growth. Revenue in 2015 grew to EUR53.27 billion from EUR48.43 billion in 2014.
Unilever said underlying sales growth in the first quarter of 2016 was driven by market share gains across all four categories of personal care, foods, home care and refreshment. Emerging markets grew by 8.3% with an increased contribution from volume. Developed markets declined by 0.3% with volume growth offset by widespread price deflation in Europe.
By category, Unilever said personal care grew ahead of the group average, with deodorants continuing to perform strongly, leading to underlying sales growth of 5.8%.
The foods division sustained its return to growth, with a good performance in savoury led by cooking products in emerging markets and Hellmann's dressings, although sales of spreads declined due to continued market contraction in developed countries. Underlying sales grew by 1.9%.
Home care also delivered strong, broad-based growth, Unilever said, driven by innovations in higher margin segments. Fabric conditioners grew at double-digit rates and Cif cleaning sprays also performed well in Europe, leading to underlying sales growth of 7.0%.
In refreshment, ice cream continued the strong momentum of the last two years, driven by premium brands such as Magnum, Ben & Jerry's and Carte D'Or. Underlying sales grew by 3.8%.
Geographically, Asia achieved solid volume gains while the Philippines delivered double-digit growth and growth in Turkey was driven by a strong performance in refreshment. South Africa and Thailand had slower starts to the year reflecting softer market conditions.
Latin America also achieved double-digit underlying sales growth driven by strong pricing, while volumes also grew. North America grew slightly, driven by deodorants and ice cream, but spreads continued to decline.
In Europe, good volume growth was more than offset by price deflation. Home care and ice cream continued to grow strongly, but sustained contraction of the margarine market weighed on the foods performance in Germany and France.
Unilever raised its quarterly dividend by 6% to EUR0.3201.
"With markets remaining volatile, we continue to focus on driving agility and resilience in our business through the key programmes which we set out at the end of last year: net revenue management, zero-based budgeting, and the next stage in our continued organisational transformation," Chief Executive Paul Polman said in a statement.
"This will position us well to deliver another year of volume-driven growth ahead of our markets, steady improvement in core operating margin and strong cash flow. These underpin sustained long-term value creation for our shareholders," he added.
Also on Thursday, Swiss foods giant Nestle SA reported its first-quarter results. It recorded broadly flat group sales of CHF20.934 billion compared to CHF20.918 billion in the first quarter of 2015. Sales grew by 3.9% on an organic basis. Like Unilever, Nestle cited foreign exchange headwinds and price deflation as factors which hindered sales growth.
Shares in Unilever were trading up 0.9% at 3,290.50 pence on Thursday afternoon.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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