Unilever PLC (UL) began the first quarter of the year on an impressive note. The company recorded underlying sales growth (excludingthe impact of acquisitions and disposals) of 8.4% in the first quarter of 2012 driven by both improved pricing and volume gains. The 8.4% growth comprised of a pricing benefit of 4.7% and volume growth of 3.5%. Emerging markets contributed 11.9%, whereas developed markets added 4.2% to the underlying sales growth.
Segment Details (Category-Wise)
Personal Care:The segment delivered underlying sales growth of 10.4% in the quarter, driven by volume gains of 6.1% and improved pricing of 4.0%.
In skin cleansing, the introduction of Simple brand in the US helped drive growth in the quarter. Fair & Lovely performed strongly while Pond’s made a good start in the quarter with transition to the new Age Miracle and Flawless White ranges. Dove, Lifebuoy, Vaseline and Radox also progressed nicely in the quarter.
The Hair section was positively driven by rollout of its brands in new markets. Tresemm? was a success in Brazil, while Clear grew across Asia and Latin America markets. Axe hair rolled out across Europe while Dove Damage Therapy with its premium Style and Care styling range was launched in US in the quarter.
Deodorants performed well due to strong growth in its Dove and Rexona brands Maximum Protection. Oral growth was driven by the recent introduction of Signal Sensitive Expert in France. The oral division also entered the markets of Pakistan, Sri Lanka and Thailand in the quarter.
Home Care:The segment delivered underlying sales growth of 10.0% in the quarter, contributed by volume growth of 4.7% and improved pricing of 5.1%.
The segment’s laundry division was benefited by the launch of Comfort fabric conditioners in the markets of Australia, New Zealand, South Africa and the Philippines. Household cleaners were benefited by the launch of Domestos Toilet System range. The introductions of Domestos in Argentina, Pakistan and Sri Lanka; Sunlight hand dishwash products in South Asia and South East Asia; and Cif in China also added to the growth.
Foods: The segment delivered underlying sales growth of 5.9% in the quarter, contributed by volume growth of 0.4% and improved pricing of 5.5%.
Spreads and dressings did well in the quarter. Products like Flora margarine, Liquid margarine and Hellmann’s brand continued to perform well. The savoury category reflected the success of the Knorr baking bags, with the launch of Knorr ‘Side-Kicks’ range in US and Knorr Rice-Mate in the Philippines.
Refreshments: The segment delivered underlying sales growth of 7.4% in the quarter, contributed by volume growth of 2.9% and improved pricing of 4.3%.
The category was benefited by ice cream growth, driven by the launch of Magnum in North America, Malaysia and the Philippines. Cornetto Devils & Angels and Cornetto Enigma Cookie brands also performed well. Though beverages category experienced slower growth with weak volumes in Brazil, the re-launch of Lipton brand in Russia and growth of Lipton Tea & Honey in the US benefited the category.
Region-wise, underlying sales growth in Asia was 11.2%, driven by positive pricing of 5.9% and 5.0% contribution from volumes. In the Americas, underlying sales growth was 7.9%, contributed by positive pricing of 6.5% and volume growth of 1.3%. In Europe, underlying sales growth was 5.1%, driven by positive pricing of 1.0% and 4.0% contribution from volumes.
Currently, we have a Neutral recommendation on Unilever. The stock carries a Zacks #2 Rank in the near term (‘Buy’ rating).
To read this article on Zacks.com click here.
Zacks Investment Research
