Key facts
- Unilever is introducing new products, including avocado mayonnaise, to revitalize its food business.
- The company has upgraded its full-year sales growth forecast to 4-6%.
- Operating profit for the first half increased by 2.6% to €4.9bn.
- The food arm's turnover decreased by 4% to €6.3bn, while personal care sales grew by 4.2% to €6.8bn.
- Sales in Europe declined by 0.9%, while Latin America and India saw significant growth.
Unilever is implementing new strategies, including the introduction of products like avocado mayonnaise, to address declining sales in its food division. This division is slated for a £33bn spin-off to US food company McCormick. Despite these efforts and an upgrade to its full-year sales growth expectations, the food arm's performance, alongside that of its European operations, has impacted the group's overall operating profit, which saw a modest 2.6% increase to €4.9bn in the first half.
The company reported a 4% drop in turnover for its food business, reaching €6.3bn, while its personal care segment experienced a 4.2% rise to €6.8bn. Unilever cited a "softer market environment and increased competition" in the US condiments market as reasons for the food arm's struggles, but expressed optimism for acceleration in the second half driven by innovation. The gross margin in the food arm was affected by rising commodity costs and increased investment.
Performance varied geographically, with European sales falling by 0.9%, while Latin America and India demonstrated strong growth at 7.6% and 8% respectively. The personal care division, which constitutes over a quarter of group turnover, saw nearly 5% growth, with the Dove skincare range performing particularly well. Investment in World Cup advertising campaigns also contributed positively in the second quarter.
Chief executive Fernando Fernandez highlighted the company's portfolio transformation, stating that brands are stronger and execution is sharper. He expressed confidence in meeting the upgraded full-year outlook of 4-6% sales growth, with an improved underlying volume growth forecast of 3%. An analyst from Freetrade noted that Unilever's first-half results provide positive momentum and a clear direction for the company.