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Q4, Full Year 2012 Financials for Unilever Show Broad Growth
Posted: January 23, 2013
Unilever reported its 2012 full year and fourth quarter 2012 financial results, seeing strong, broad-based growth during the year. For the full year, turnover increased by 10.5% to €51.3 billion with a positive impact from foreign exchange of 2.2% and acquisitions net of disposals of 1.1%. Underlying sales growth was at 6.9%, comprising volume growth of 3.4% and price growth of 3.3%, while the emerging markets’ underlying sales growth of 11.4% now represents 55% of turnover. Meanwhile, underlying sales growth for the fourth quarter of 2012 was 7.8%, with volume growth of 4.8% and price growth of 2.9%.
Speaking on the results, Paul Polman, Unilever’s CEO, stated, “We continue to make good progress in transforming Unilever into a sustainable growth company. We have reported another quarter of good quality, profitable growth ahead of our markets. All categories and all geographies grew with a good overall balance between volume and price. Emerging markets again contributed double-digit growth helping us exceed €50 billion turnover, an important milestone in our journey to double the size of Unilever from €40 to €80 billion while reducing our environmental impact. These results have been achieved in tough economic conditions, with volatile commodity costs and in an intensely competitive environment. They reflect the progress made in delivering bigger, better innovations and rolling them out faster, improving our execution in the marketplace and increased discipline driving savings in all areas of the business. We continued to invest behind our brands, again increasing advertising and promotions spend. I am pleased to report that Magnum and Sunsilk have joined the group of €1 billion brands in our portfolio, bringing the total to fourteen. This gives us confidence that Unilever is becoming fit to win. Importantly, we achieved these results whilst continuing to lay the foundations for the long term. The Unilever Sustainable Living Plan is becoming embedded across the business. However there is no room for complacency: markets will remain challenging, with intense competition and volatile commodity costs. We remain focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow.”
Throughout 2012, Unilever’s markets experienced markedly different dynamics as emerging markets grew in both volume and value terms while developed market value remained subdued, with volumes lower than prior year. In this context, the company delivered another quarter of solid growth. Emerging markets underlying sales growth was 10.8% in the quarter, evenly split between volume and price, taking the full year underlying sales growth to 11.4%. The developed markets grew 4.0% in the quarter and were up 1.6% in the full year.
For Unilever’s personal care division, turnover of €4.7 billion for the fourth quarter 2012 and of €18.1 billion for full year 2012 was recorded. Hair finished the year with a strong quarter of double-digit growth. Tresemmé had an excellent quarter, reflecting strength in Brazil and the impact of the recent launches in Indonesia and India. Dove Hair benefited from the continuing success of Dove Damage Therapy, and Clear also grew strongly, completing a good first year in the highly competitive U.S. market. Sunsilk became a €1 billion brand driven by the growth of the core business coupled with the success of recent innovations such as the natural oils range.
Skin performance reflected the success of innovations across the portfolio. Dove Nutrium Moisture continues to drive growth in body wash, and the Dove Purely Pampering range, successful in skin cleansing, is now being extended to hand and body. Dove Men+Care continued to build sales and was extended to male face care in the U.K. Lifebuoy had another strong quarter reflecting good progress on the core products, the success of Lifebuoy CliniCare 10 and the recent launch of color-changing germ protection hand wash in Indonesia and India. The broad-based growth of the Lux brand in emerging markets reflected the successful relaunch with improved product quality, winning fine fragrances and strong advertising. The acquired Kalina brands continued to make good progress in Russia.
Deodorants growth reflected a good performance from Rexona with the notable success of Maximum Protection in Latin America and the extension of the MotionSense technology to North America. Dove deodorant was underpinned by a strong innovation program and the rollout of Dove Men+Care. Competitive intensity in oral was high, but Signal Expert Protection continued to do well and the company also launched White Now Gold in France and Italy.
Core operating margin was down 50bps, reflecting stable gross margin and the investment Unilever is making to build beauty capabilities and infrastructure.
Geographically, for the Asia/AMET/RUB region, balanced growth in the fourth quarter, with volumes ahead of markets, reflected continuing strong performances in Indonesia, Thailand and Pakistan. Growth in India was broad base, across categories and channels. Russia implemented the regional SAP platform during the quarter, and the company saw good progress from the recently acquired Kalina business.
North America grew mid single-digit in the quarter, adjusting for the impact of the sales brought forward in the prior year prior to a systems upgrade. The growth was mainly volume driven. The launch of Clear helped drive a strong performance in hair. Latin America grew by 11.6% in the quarter, the sixth successive quarter of double-digit growth, driven by Argentina and Brazil, the latter benefiting partially from the success of Tresemmé in hair.
And European performance was sluggish reflecting the fragile state of consumer confidence and intensely competitive markets. However, despite this difficult environment, Unilever delivered positive growth for the year with the U.K. and France continuing to perform well.