Unilever's personal care profits fall despite overall growth
increasing prices transformed its food profits in the first quarter
but failed to lift its profits in personal care.
The Anglo-Dutch company, whose brand stable includes Dove, Lux and Ben & Jerry's, said its commodity costs increased €400m in the quarter persuading it to increase its prices 4.8 per cent to sustain profit growth. Turnover remains solid despite price rises Sales revenue stood up strongly against the price hikes increasing 0.5 per cent to €9,571m in an unfavourable foreign exchange rate environment. Once the impact of currency fluctuations, acquisitions and disposals are taken out of the equation sales growth was significantly higher at 7.2 per cent. Overall the strategy positively affected Unilever's bottom line as net profit rose 34 per cent at current exchange rates to €1,407. Efficiency improvements increase profits However, tough efficiency improving measures such as the axing of 20,000 jobs across its divisions, 11 per cent of its workforce, were largely responsible for the profit increases. Unilever succeeded in increasing its margins to 19 per cent for the quarter compared to 13.7 per cent for the same period last year taking operating profit up 39.4 per cent to €1,302m. The changes were most spectacular in the food divisions. For example, in ice cream and beverages, where net sales increased by only 0.5 per cent, operating profit jumped 89.5 per cent to €216m. Cosmetics profit falls The same trick was not repeated in the personal care division where sales were up 1.1 per cent to €2,749m but operating profit was down 5 per cent to €515m. Unilever intends to remedy this situation and has further productivity boosting plans up its sleeve. In particular the company has recently decided to combine Home & Personal Care and Foods into a single category structure. Commenting on the latest results Unilever CEO Patrick Cescau said: "We have had a good start to the year, with strong organic growth across our categories and an underlying improvement in operating margin." "We continue to invest behind our brands, while taking the necessary pricing action to recover a sharp increase in commodity costs." On the back of its performance in the first quarter the company now expects to exceed its 3-5 per cent target range for underlying sales growth, added Cescau.