Unilever focus is dynamic categories for future growth, targets US, India, China
Unilever said on Thursday that its focus for the future is developing its portfolio “into high growth spaces” and positioning it in categories that will drive growth, a goal that will drive its decision-making around acquisitions and disposals.
Analysts think that’s likely to mean further expansion in higher-end beauty, an area in which it has made a number of acquisitions in recent years.
It also aims to “accelerate” in the US, India and China and leverage its emerging markets strength. The company said around 35% of its turnover currently comes from those three giant countries alone.
And it’s aiming to “lead in the channels of the future”, which means a bigger focus on e-commerce and “digitising the distribution trade, underpinned by advanced shopper insight”.
There was speculation this week that it would sell off some non-core beauty brands in its portfolio and while its growth strategy suggests that will be the case, it didn’t give any details of exactly which brands would be on the auction block.
Looking at its Q4 and full-year results, it said it saw underlying sales rising 1.9% in its latest full year with an increase to €50.7 billion, while Q4 underlying sales rose 3.5% to €12.1 billion. However, underlying operating profit was down 5.8% in the year to €9.4 billion and operating profit on a GAAP basis was down 4.6% to €8.3 billion.
Within that, its biggest division, Beauty & Personal Care, saw underlying sales up 3.5% to €5.2 billion in Q4 and up 1.2% to €21.1 billion in the year, so the latest quarter clearly showed an acceleration.
During the year, skin cleansing saw mid-teens volume-led growth, “driven by the important role of hand hygiene in combatting the spread of Covid-19”. Its Lifebuoy hygiene brand grew by over 50%, as it launched the 'H is for Handwashing' educational campaign to teach children the importance of handwashing with soap.
But “lockdowns and restricted living” in its markets led to lower demand for skincare, deodorants and haircare, which each saw volume and price declines, most significantly in Q2. Skincare declined in high-single-digits and deodorants in mid-single-digits. In haircare, growth in wash and care partially offset a decline in styling products, leading to a low-single-digit decline overall.
Its Prestige Beauty business that should be a key growth channel was understandably impacted by store closures, but it achieved a shift to over 50% e-commerce, so overall it only declined in low-single-digits.
The underlying operating margin in Beauty & Personal Care fell by 100bps, with a reduction in gross margin “driven by adverse mix and additional costs related to Covid-19”. This was partially offset by a reduction in brand and marketing investment, as it conserved spend during lockdown periods, before significantly stepping up investment in the second half.
CEO Alan Jope talked of “a volatile and unpredictable year” that saw the company demonstrating its “resilience and agility” and that it was “winning market share in over 60% of our business in the last quarter”.
Copyright © 2021 FashionNetwork.com All rights reserved.