Unilever has announced its results for the first half of 2023 (H1) and reported that its underlying sales growth has been especially strong.
In emerging markets, underlying sales grew by 10.6%, with price accounting for 10% and a return to positive volume growth at 0.6%. Latin America experienced a 16.3% increase in underlying sales with moderating prices and a 1.6% rise in volume. South Asia recorded double-digit growth driven by price and volume, primarily led by India.
In China, volumes improved after the lifting of pandemic-related restrictions. However, growth in South East Asia was subdued due to a sales decline in Indonesia. On the other hand, Turkey demonstrated strong volume growth despite a hyper-inflationary economy.
Gross margin, after facing high cost inflation for several periods, remains 270 basis points (bps) below its H1 2019 level. Brand and marketing investment increased by €0.4 billion in constant exchange rates, representing a 30 bps increase as a percentage of turnover in current exchange rates.
Nutrition Category Growth Supported by Hellman’s
The nutrition category witnessed a 10.4% increase in underlying sales, with 12.6% attributed to price and -1.9% to volume. Scratch Cooking Aids experienced high single-digit growth. However, growth in this category was driven by price, with negative volume particularly in Europe and North America.
Dressings continued to exhibit double-digit growth, with Hellmann’s driving sales during the Easter and BBQ season. Unilever Food Solutions also saw double-digit growth in China’s market during the first half. Unilever achieved this growth by combining the “make taste, not waste” campaign with innovations such as spicy mayonnaise in the United States.
Underlying operating margins increased by 80bps, primarily due to a reduction in overheads. However, lower gross margin resulted from continued input cost inflation.
On June 14th, 2023, Unilever announced a strategic acquisition of Yasso Holdings, Inc., a premium frozen Greek yogurt brand based in the United States.
Ice Cream Sales Increase Despite Inflationary Environment
The underlying sales of ice cream grew by 5.8%, driven by a 11.5% increase in price and a -5.2% decline in volume.
In-home ice cream sales experienced low-single digit growth due to lower consumption caused by the discretionary nature of the category in an inflationary environment. On the other hand, out-of-home ice cream sales recorded double-digit growth in both price and volume. While poor weather in April and May impacted sales in Europe, good weather in June partially offset this decline.
Magnum achieved high single-digit growth, thanks to the success of limited edition products such as Starchaser and Sunlover. In North America, Unilever launched Talenti mini gelato and sorbetto bars, while the Heart brand grew mid-single digit with the introduction of a new plant-based variant under the Twister range.
Optimism for Unilever in H2
Unilever aims to maintain strong underlying sales growth and expects a 5% increase in sales growth for 2023. The company also anticipates continued moderation in underlying price growth throughout the year.
Hein Schumacher, CEO of Unilever, expressed confidence in the company’s performance in the first half of the year. He emphasized the importance of leveraging Unilever’s global presence, exceptional brand portfolio, and talented workforce to improve performance and competitiveness. Schumacher highlighted the focus on science-backed innovations and investments behind the company’s brands as a critical priority.
Unilever plans to share further details regarding its performance and future outlook when reporting its Q3 results in October.
