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Full-year growth led by emerging markets and Home Care

We announced our results for the full-year 2019, which show underlying sales growth of 2.9%, led by our emerging market business which grew 5.3% and our Home Care division which grew 6.1%.

  • Underlying sales growth was 2.9% with 1.2% volume and 1.6% price
  • Underlying operating margin increased 50bps
  • Turnover increased 2.0%
  • Free cash flow increased €0.7 billion to €6.1 billion
  • Underlying earnings per share increased 8.1%

Comment from CEO Alan Jope

“In 2019 we delivered underlying sales growth of 2.9%, balanced between price and volume, a further year of good margin and earnings progression, and strong free cash flow. We saw strong growth from emerging markets and our Home Care division. Overall growth was slightly below our guided range for the year due to the slowdown we saw in the fourth quarter.

“We are now stepping up execution against our fundamental drivers of growth. These are to: increase penetration by improving brand awareness and availability; implement a more impactful innovation programme; improve our performance in faster growing channels; drive purpose into all our brands; and fuel growth through cost savings.

“We are continuing to evaluate our portfolio and have initiated a strategic review of our global tea business.

“In 2020, our underlying sales growth is expected to be in the lower half of the multi-year 3-5% range and will be second-half weighted. While we expect an improvement from the fourth quarter of 2019 into the first half of 2020, first half underlying sales growth will be below 3%. The impact of the coronavirus outbreak is unknown at this time. As we near the completion of our three-year strategic plan, we expect continued improvement in underlying operating margin and another year of strong free cash flow, remaining on track for our 2020 goals.”

Our markets

There has been a significant slowdown during 2019 in South Asia and we have seen some market softening in China. While parts of Latin America have been volatile, we have seen signs of improvement in Brazil. South East Asian markets maintained good growth while developed markets, in particular Europe, remained challenging.

Unilever overall performance

Underlying sales grew 2.9% with 1.2% from volume and 1.6% from price. Growth was led by a strong performance in Home Care. Emerging markets grew 5.3%, driven by performance in Asia/AMET/RUB, despite a slow end to the year in West Africa, South Asia and the Middle East. Latin America returned to growth while Africa declined. Developed markets declined with Europe lapping a very strong ice cream season from the previous year. In the fourth quarter, price growth decelerated, driven by price reductions in India, significantly lower inflation in Turkey and increased promotional spend in Europe.

Turnover increased by 2.0% which included a positive 1.5% impact of currency related items and a negative net acquisitions and disposals impact of 2.3%, mainly driven by the disposal of spreads.

Underlying operating margin improved by 50bps to 19.1%. The improvement was driven by 30bps of gross margin, a result of our 5S savings programme and positive mix while overheads contributed 20bps. We continued our zero-based-budgeting and change programmes, which are ensuring we transform our organisation to be future-fit. Brand and marketing investment as a percentage of turnover was flat and in constant currencies investment increased €70 million, excluding spreads, with increased spend in the second half. Constant underlying earnings per share increased 5.8% and underlying earnings per share increased 8.1%, including a positive impact of 2.3% from currencies. We delivered free cash flow of €6.1 billion and improved our cash conversion.

Beauty & Personal Care

Underlying sales grew 2.6%, with 1.7% from volume and 0.9% from price.

Deodorants delivered broad-based growth, supported by double digit growth from Dove. We saw good performance from our Rexona Clinical range, with patented anti-perspirant technology to better serve consumer needs, as well as Dove’s zero aluminium range.

Growth in skin cleansing was held back by price reductions as a result of lower commodity costs. Dove’s growth was supported by microbiome-friendly innovations.

Growth was weak in hair care with high competitive intensity in the growth hotspot of the US. In China there was continued pressure from local players.

In skin care, Pond’s and Vaseline continued to perform well, with on-trend innovations such as Pond’s Glow Up cream. We expanded into white space markets with our Simple brand, which is now in 30 markets, including Turkey and the Gulf region.

Oral care grew slightly and natural variants such as charcoal, aloe and clove drove growth in Smile.

Prestige brands continued to deliver double-digit growth, with strong performances from brands such as Dermalogica, Hourglass and Living Proof. We added to our prestige portfolio by acquiring Garancia, a French derma-cosmetic brand, and Tatcha, a modern skincare brand rooted in classical Kyoto rituals.

Underlying operating margin increased by 70bps reflecting lower overheads and brand and marketing efficiencies as a result of our zero-based-budgeting programme.

Home Care

Underlying sales again grew strongly delivering 6.1%, with 2.9% from volume and 3.1% from price.

Home and hygiene performed well, benefitting from our cleaner choices products such as Cif surface sprays with natural cleaning ingredients. Hand dish wash saw continued growth momentum, with good performance from Sunlight with recycled packaging, as well as white space launches in Brazil under Brilhante and in China under Omo.

Format premiumisation, in particular liquids and capsules, continues to be a growth driver in fabric solutions. Laundry brand Seventh Generation, based on renewable plant-based ingredients, grew strongly.

In fabric sensations, performance was supported by ongoing market development driven growth in India, where we also launched premium detergent brand Love & Care. In China we successfully launched Love Home & Planet.

Underlying operating margin increased by 150bps driven by gross margin improvements together with lower overheads.

Foods & Refreshment

Underlying sales grew 1.5%, with volumes down 0.2% and pricing of 1.7%.

Ice cream grew, however volumes declined due to a strong comparator from a particularly good European summer in the prior year. Growth was supported by plant based and ‘better for you’ offerings, including Magnum vegan and Ben & Jerry’s lighter Moophoria variants.

Tea saw price-led growth, however volumes declined due to subdued consumer demand for black tea in developed markets. We continued to focus on the growing segments of premium black tea, black tea in emerging markets and fruit and herbal variants, with our premium herbal brand Pukka performing well.

In dressings, Hellmann’s grew, with the US business returning to growth in the second half of the year. The Hellmann’s vegan mayonnaise variant is now on shelves in over 20 countries while Sir Kensington’s premium ranges of mayonnaise and salad dressings have now more than doubled in size since the acquisition.

Price-led growth in savoury was supported by Knorr’s portfolio in scratch cooking and the launch of snacking ranges which address the convenience trend. Knorr launched the Future 50 Foods report in partnership with the WWF, highlighting the next generation of plant-based foods that can boost nutritional value whilst reducing environmental impact.

Newly-acquired brand The Vegetarian Butcher entered a partnership with Burger King® to offer the Rebel Whopper® across 25 countries in Europe.

Underlying operating margin decreased by 20bps driven by a reduction in gross margin.

Tea Strategic Review

As well as reporting our full year results, we are announcing today a strategic review of our global tea business, as we continue to evolve our portfolio to higher growth spaces.

Unilever has a long-established position as the biggest tea business in the world with brands such as Lipton, Brooke Bond and PG Tips; and has expanded into the premium, fruit and herbal market in recent years. However, sales of traditional black tea, the largest segment of the category, have been in decline in developed markets for several years due to changing consumer preferences.

The strategic review will consider all options for Unilever’s tea business and is expected to conclude by mid-year.


Safe Harbour

Where relevant, these actions are subject to the appropriate consultations and approvals.

This announcement may contain forward-looking statements, including ’forward-looking statements’ within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words such as ’will’, ’aim’, ’expects’, ’anticipates’, ’intends’, ’looks’, ’believes’, ’vision’, or the negative of these terms and other similar expressions of future performance or results, and their negatives, are intended to identify such forward-looking statements. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Unilever Group (the ’Group’). They are not historical facts, nor are they guarantees of future performance.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Among other risks and uncertainties, the material or principal factors which could cause actual results to differ materially are: Unilever’s global brands not meeting consumer preferences; Unilever’s ability to innovate and remain competitive; Unilever’s investment choices in its portfolio management; inability to find sustainable solutions to support long-term growth; the effect of climate change on Unilever’s business; customer relationships; the recruitment and retention of talented employees; disruptions in our supply chain; the cost of raw materials and commodities; the production of safe and high quality products; secure and reliable IT infrastructure; successful execution of acquisitions, divestitures and business transformation projects; economic and political risks and natural disasters; financial risks; failure to meet high and ethical standards; and managing regulatory, tax and legal matters. These forward-looking statements speak only as of the date of this announcement. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Further details of potential risks and uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including in the Annual Report on Form 20-F 2018 and the Unilever Annual Report and Accounts 2018.

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