Unilever Reports Robust Underlying Growth in Q1, Confirms Beauty Sale
LONDON – Unilever made strides in the first quarter of 2021 with underlying sales growing 5.7 percent to 12.3 billion euros, and the spinoff of its smaller beauty assets underway.
The parent of brands ranging from Dove, Pond’s and Kate Somerville to Magnum and Ben & Jerry’s said Thursday that actual growth in the three months to March 31 was down 0.9 percent, due chiefly to currency headwinds.
Unilever’s Beauty and Personal Care division accounted for just under half of overall sales, rising 2.3 percent in underlying terms to 5 billion euros in the period. Skin cleansing, skin and hair care all grew by a mid-single digit, while deodorants declined in the high-single digits as the market was impacted by fewer people leaving their homes to go to work, or for social occasions.
Unilever said its Prestige business grew in the “strong double digits,” helped by the gradual restocking and reopening of brick-and-mortar stores in the U.S. The company noted that Hourglass launched a 100 percent vegan red lipstick formulated with a patent-pending pigment produced from crushed beetles, a centuries-old technique.
The company also confirmed that the spinoff of its smaller beauty and personal care brands is underway. The brands, which are predominantly sold in Europe and North America, will operate under the name Elida Beauty “and will benefit from dedicated management focus,” said Unilever.
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The brands in the group are Q-Tips, Caress, Tigi, Timotei, Impulse and MonSavon, and together generated revenues of 600 million euros in 2020. Earlier this year Unilever had flagged its plans to shift the brands and to focus on its bigger beauty and prestige names, as well as on vitamins and nutrition.
In fiscal 2021, the company said it expects to deliver underlying sales growth within its multi-year framework of 3 percent to 5 percent, with the first half of 2021 “around the top” of this range.
It expects underlying operating margin to increase “slightly” in the full year, following a decline in the first half that was driven by a number of factors.
Unilever said COVID-19 continues to cause “additional supply chain costs and a negative margin mix,” and noted that commodity and freight costs have increased further, while marketing spend will also be higher than in the corresponding period last year when the pandemic had forced much of the world into lockdown.
Unilever said the operating environment remains “volatile” across the company’s broad geographic footprint, and that fluctuating COVID-19 case levels and markets entering and exiting lockdowns “continue to impact consumer behavior and channel dynamics.”
Unilever noted that strong demand in North America and Europe for in-home food has continued, while consumer activity in beauty and personal care categories has remained “subdued.”
Unilever continues to push ahead in the underperforming deodorant category. Earlier this week the consumer giant said that Rexona deodorant (also known as Sure and Degree), have launched a new beta program to develop an inclusive deodorant for people with visual impairment and upper limb motor disabilities.
The Sure brand is currently working with 200 individuals in the U.S., alongside design experts from Wunderman Thompson to trial a new prototype design called Sure Inclusive, which has features such as a hooked design for one-handed usage, magnetic closures, enhanced grip placement for easier application, a braille label and a larger roll-on applicator.
Unilever said that conditions in China are “normalizing,” while economic activity in India increased in the first quarter, although parts of the country are now newly locked down as a result of sharply rising COVID cases. Markets grew in Latin America in the first quarter, despite macroeconomic conditions remaining volatile, and conditions in South East Asia remain “challenging.”
Unilever added that it’s planning a share buyback program of up to 3 billion euros in May, in one or more tranches, to be completed by the end of the year. The company said the buyback plan reflects its “strong” cash flow delivery and balance sheet position and is in line with its capital allocation framework.
Alan Jope, Unilever’s chief executive officer, said the company had made a good start to the year and would continue to focus on its Prestige Beauty and Functional Nutrition divisions.
“We are committed to delivering superior long-term financial performance through our sustainable business model, which we believe has never been more relevant than it is today,” said Jope.
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