Unilever Plc

First half highlights

·      Underlying sales growth 4.7%, ahead of our markets, with volume up 2.2%

·      Sales increased by 5.4% at constant exchange rates and decreased by (2.6)% at current exchange rates

·      Emerging markets underlying sales growth 8.0% with volume up 2.9% 

·      Core operating margin at 15.0% up 50bps, driven by an 80bps improvement in gross margin

·      Core earnings per share up 7.5% at constant exchange rates, up 1.3% at current exchange rates

Second quarter highlights

·      Underlying sales growth 4.7% with volume up 1.8%

“Our first half results further demonstrate the progress we have made in the transformation of Unilever to deliver consistent, competitive, profitable and responsible growth. Despite a challenging environment with slower global economic growth and intensifying geopolitical instability, we have again grown profitably in our markets, competitively and driven by strong innovations.

This consistency of performance, achieved during a period of high volatility and accelerating change, shows that our long-term focus is paying off. We are seeing the benefits from delivery against the four differentiated category strategies that continue to guide investment in our brands, our infrastructure and our people.

We have been preparing ourselves for tougher market conditions in 2016 and do not see any sign of an improving global economy. Against this backdrop we continue to drive agility and cost discipline, implementing the key initiatives announced at the end of last year: net revenue management, zero based budgeting and 'Connected 4 Growth' which is the next stage in our organisational transformation. Our priorities continue to be volume-driven growth ahead of our markets, steady improvement in core operating margin and strong cash flow.”

Underlying sales growth, core operating margin and core earnings per share are non-GAAP measures (see pages 5 and 6).                  21 July 2016

Our markets: Consumer demand remained weak and in the markets in which we operate volumes have slowed further, with market volume growth low in emerging markets and negative in Europe and in North America.

Unilever overall performance: Underlying sales growth in the first half was broad-based and driven by market share gains across the four categories which continued to deliver progress against their strategic priorities: Personal Care and Foods achieved improved growth while maintaining strong profitability. Home Care and Refreshment improved margins while continuing to grow competitively. Emerging markets grew 8.0% driven by good volume growth in Asia and price growth in Latin America. Developed markets grew 0.2% with volume growth more than offsetting price deflation in Europe.

Gross margin improved by 80bps to 42.7% driven by margin-accretive innovations and acquisitions as well as our discipline in driving savings programmes. In local currencies brand and marketing investment was sustained at the absolute level of the prior year and as a percentage of turnover was down by 50bps due to sales leverage and cost efficiencies. Overheads were up by 80bps from the lapping of gains on pension plan changes in the prior year and the higher overheads ratio of new business models including the acquired prestige brands. Core operating margin improved by 50bps to 15.0%.