Unilever grew both turnover and profit in the first half of the year as reported decline in its spreads business, which it plans to sell, slowed.
Turnover was 5.5% higher than the first half of 2016 at €27.7 billion, while net profit grew 22.4% to €3.3 billion.
Its spreads business, which includes brands like Flora and Bertolli, slowed decline from 5.1% in the first quarter to 3.7% over the first six months of the year – but the company is yet to find a buyer, a day after Reckitt Benckiser wrapped up the sale of its unwanted food business to McCormick.
The rate of decline of spreads is said to be a result of sales growth in emerging markets offsetting the marketing contraction in developed countries.
Unilever said in April that it would sell its spreads unit as part of a structural review in response to Kraft Heinz’s $143 billion approach. Unilever shares have gained about 25% since the takeover attempt was made public.
Strong performing brands in the company’s food business included Magnum, which saw double-digit growth thanks new flavour launches. Knorr, Unilever’s largest food brand, performed well by tapping into consumer needs for time-efficient cooking.
Leaf tea showed good growth as the company reaped the rawards of innovations the specialty and premium tea segments. Lipton was launched in Brazil and Argentina, and is extending its presence in the faster-growing green and matcha markets.
Total sales in Europe were down 0.8%, which the company put down to weak consumer demand as well as a challenging retail environment.
Unilever CEO Paul Polman said: “Our first half results show continued growth well ahead of our markets and a substantial step-up in profitability despite the persisting volatile global trading environment. It once more shows the validity of Unilever’s long-term compounding growth model.
“The actions we are taking keep us on track for another year of underlying sales growth ahead of our markets, in the 3 to 5% range. We anticipate accelerating growth in the second half of the year driven by the phasing of our innovation plans and a step-up in brand and marketing investment.
“We now expect an improvement in underlying operating margin this year of at least 100 basis points and strong cash flow.”
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