Unilever’s profits soared in 2017 as the Anglo-Dutch company benefited from growth in emerging markets and its 11 acquisitions.
Net profit increased 16.9% to €6.5 billion and turnover was up by 1.9% to €53.7 billion. The company said that its step up in volume growth in the fourth quarter of the year, with 4.2% from emerging markets, included benefits from its strengthened innovation plan.
Unilever, which employs 169,000 people around the world and owns over 400 household brands, rejected an approach last year from Kraft Heinz with regards to a potential merger. The takeover attempt prompted Unilever to sell its spreads business for €6.83 billion as it seeks to rejuvenate its business.
The company said that market conditions in 2017 “remained challenging” with volumes in the markets which it operates in “growing at less than 1%”.
Unilever CEO Paul Polman, who is expected to step down from his €8.3 million-a-year position in 2019, said the company has become increasingly competitive in the past year.
“We have delivered a good all-round performance with competitive growth, including an innovation-led improvement in volumes in the fourth quarter, and substantially increased margin, earnings and cash flow,” he said. “This puts us well on track to deliver towards the strategic objectives set out for 2020 and demonstrates the progress we have made in transforming Unilever into a more resilient and more agile business.
“2017 has once more been a year of major change for Unilever with the acceleration of the Connected 4 Growth programme, that we announced in 2016. With the implementation of a more agile, consumer-facing organisation, we are seeing quality and speed of innovation further improve.
Unilever CEO Paul Polman © World Economic Forum/Flickr
“At the same time, we have significantly stepped up the delivery from our savings programmes and continued the evolution of our portfolio with 11 acquisitions announced and completed in the year as well as the announcement of the disposal of the spreads business. All of this is making Unilever increasingly competitive in light of fast-changing consumer and technology trends.
“Our priorities for 2018 are to grow volumes ahead of our markets, maintain strong delivery from our savings programmes and complete the integration of foods and refreshment, as well as the exit from spreads. We expect this will translate into another year of underlying sales growth in the 3%-5% range, and an improvement in underlying operating margin and cash flow, that keeps us on track for the 2020 targets.”
Within its food business, Unilever said it has continued to modernise its portfolio through innovations and acquisitions, while building its presence in emerging markets and sustaining a strong performance in food service channels.
Growth in savoury, which was above the group average, was driven by good performances of Knorr, which aimed to respond to consumer needs such as naturalness and time-saving cooking products, and local brands including Bango and Pot Noodle.
In dressings, Hellmann’s was relaunched with stronger natural claims in 25 markets, while the organic variants have been rolled out from North America into Europe. However, volume growth was moderated by increased promotional intensity during the year, particularly in North America.
Meanwhile in its refreshment unit, the company “had another good year despite increased new entrant competitive activity, particularly in North America”.
Innovations in its premium ice cream brands were said to perform well, which included Magnum pints. Lipton expanded its presence in faster-growing green and matcha segments. Finally, Pure Leaf was introduced to Canada and the UK after the successful launch in the US.
Among Unilever’s acquisitions last year were Weis ice cream in Australia, Pukka Herbs tea in the UK and Mãe Terra organic food in Brazil. It also invested in US meal delivery company Sun Basket.
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