LONDON — Unilever P.L.C. posted strong results for the first quarter of 2019. The company’s Beauty & Personal Care and Home Care business units saw global sales rise 3.1% and 6%, respectively. Unilever’s Food & Refreshment unit, on the other hand, saw sales rise 1.5% and management said they are focused on modernizing the unit’s product portfolio as the business struggles in such developed markets as Europe and North America.
The food businesses results stemmed from retail pressures in Europe and “heavy competitive pressure” in its North American dressings business, said Graeme Pitkethly, chief financial officer, during an April 18 conference call with financial analysts. The company’s ice cream business had a strong quarter as sales rose 7% across all regions.
“Transformation of our foods business is key, and growth trends such as vegan and naturals are important elements of our innovation funnel for both new and core brands,” Mr. Pitkethly said. “In January, Knorr launched the Future 50 Foods campaign in conjunction with the World Wide Fund for Nature. The report focuses on 50 foods that we should eat more of in order to have a lower environmental impact.
“Looking at the channels for Foods & Refreshment. Growth in out-of-home and e-commerce is a key focus area, and Magnum is an important brand in these channels. Magnum has seen per annum growth of 7% over the last three years led by both the core and new innovations.”
Unilever’s sales for the quarter totaled €12.4 billion ($13.9 billion), and Food & Refreshment generated €4.5 billion ($5 billion) in sales. The Beauty & Personal Care and Home Care units had sales of €5.2 billion and €2.7 billion, respectively.
Alan W. Jope, chief executive officer, said improving Food & Refreshment results is a “structural challenge that we need to address by getting our food footprint more into healthy spaces and that's why you see us shifting the portfolio into things like vegetarian food, healthy snacking, children's nutrition and moving out of things like spreads and sausages.”
Mr. Jope added that the two most significant challenges Unilever faces in North America are a “dressings battle we intend to prosecute through to victory, and slow growth from our low-priced ice cream portfolio.”
Mr. Pitkethly added, “We’re engaged in a couple of very competitive environments, a couple of which are in North America. So, the North American mass ice cream markets, the first thing I would talk about, that’s about 2% of Unilever. It’s a highly volume-driven game, extremely price competitive, extremely low margin. We’re pleased, very pleased, in fact, with the performance of our premium ice cream brands in North America. So, Magnum and Ben & Jerry’s are winning share and performing well. But in that bulk mass business, it’s much tougher to win only beyond pricing.”
Unilever is also in the process of enhancing its tea portfolio. Much of the business is in black tea, but growth in developed markets is in fruit, herbal and green tea varieties. In 2017, the company acquired Pukka Herbs Ltd., an organic tea company, and it is rapidly introducing Pukka tea products around the world.
“Pukka is growing over 20% and we’re rolling it out very quickly from a U.K. base into all the countries in Europe, into North America, into Australasia, etc.,” Mr. Pitkethly said. “So, we’re doing the right thing. It just takes time to turn.”