LONDON — The new Magnum Double ice cream line, Lipton’s continued extension into the green and specialty teas segment, and Knorr Mealmakers in Europe had a positive effect for Unilever in the first half of the fiscal year. Exchange rates did not.
The London-based company recorded a net profit of €2,710 million ($2,975 million) in the first half, which was up 2% from €2,658 million in the same time period of the previous year. Basic earnings of €0.88 per share on the common stock were the same as the first half of the previous year.
Total revenues (turnover) of €26,283 million ($28,857 million) were down 2.6% from €26,991 million. The exchange rates had a negative impact of 7.6%. Underlying sales growth was 4.7%.
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| Graeme Pitkethly, c.f.o. for Unilever |
“If exchange rates were to stay as they are today, we would have less drag from emerging markets in the second half of the year but, of course, a new headwind from the weaker British pound,” said Graeme Pitkethly, chief financial officer for Unilever, in a July 21 earnings call.
In the Foods segment, operating profit of €1,048 million ($1,151 million) in the first half was down 10% from €1,159 million in the same time period of the previous year. Total revenues dipped 4.2% to €6,169 million ($6,773 million) from €6,441 million as exchange rates had a negative impact of 6.1%. Underlying sales growth was 2.3%.
Within Food, savory and dressings performed well, but spreads continued to decline because of market contraction in developed countries. In Europe, Knorr Mealmakers, which are promoted for having natural ingredients, helped to drive growth in savory. Convenient squeeze packaging with proprietary easy-out technology helped to boost Hellmann’s sales.
“Cooking products and dressing again grew strongly,” Mr. Pitkethly said. “We’ve slowed the rate of decline in spreads in North America, but not yet in Europe. Margins in foods remain well above the Unilever average, though slightly down on last year due to the relatively high exposure to Europe where we’re lapping some one-off pension gains and a higher restructuring cost this year.”
In the Refreshment segment, operating profit of €625 million was up 12% from €556 million. Total revenues of €5,342 million were down 3.1% from €5,512 million. Exchange rates had a negative effect of 7%. Underlying sales growth was 4.1%.
Margin-accretive innovations behind premium brands, including the new Magnum Double line, drove growth in ice cream. Lipton and PG Tips continued to extend into the green and specialty teas segments.
“Now we will continue to increase the differentiation of our innovations, with proprietary global technologies that give distinctive consumer benefits,” said Paul Polman, chief executive officer of Unilever, in the July 21 earnings call. “Take ice cream, for example. The reason that you’re able to enjoy such high quality and delicious treats wherever you are in the world is because of our unique ice-structuring proteins or the double-dipping technology that we use in Magnum, which actually, by the way, a brand, despite lousy weather may I say, also grew again by 6% over the first half of this year.”
Free-from products such as non-dairy Ben & Jerry’s performed well.
“In food and refreshments, it is more about the authenticity of the origins of the ingredients themselves, as we now see with natural Mealmakers, for example, (or) the range on Knorr or Pure Leaf teas that we’ve just launched,” Mr. Polman said.
In geographic results, The Americas recorded operating profit of €999 million in the first half, down 3% from €1,035 million in the first half of the previous year. Total revenues of €8,278 million were down 5.6% from €8,769 million. The exchange rate had a negative effect of 13.4%. Underlying sales growth was 7.4%.
