Unilever reports fastest underlying sales growth in nine years
Unilever has reported its full-year results for 2021, with an underlying sales growth of 4.5% - its fastest in nine years.
Despite the positive results, Unilever said very high cost inflation has been widespread across its markets and is expected to continue. Covid is having an ongoing impact on the operating environment, including in the final quarter of 2021 as new restrictions were implemented in some regions.
In North America and Europe, markets declined in 2021 as Unilever lapped high demand in the prior year for in-home food and hygiene products. Covid impacted India in the early part of the year while in China, the market recovered well in 2021, but economic growth has started to slow.
Markets in Latin America are recovering, with growth driven by higher prices, although macroeconomic volatility remains high. In South East Asia markets are improving following tough restrictions on daily life through 2021. In Turkey, economic conditions deteriorated throughout Q4.
Unilever’s beauty & personal care underlying sales grew by 3.8%, with 3% from price and 0.8% from volume. All categories delivered good growth apart from skin cleansing, which declined following elevated demand in 2020.
Skin care grew in the high single digits, with channels reopening in 2021. Dove refillable deodorant launched in the US and has been well received by consumers. Hair care grew in the mid-single digits with Sunsilk, Dove and Clear contributing and styling in North America being restored to competitive growth.
“The acceleration of Unilever’s operating performance continues,” commented Unilever’s CEO, Alan Jope. “We delivered our fastest underlying sales growth for nine years – 4.5% for the full year, with 1.6% from volume.
“Our €13 billion brands grew 6.4%. Priority markets of China, India and the US grew at 14.3%, 13.4% and 3.7%, respectively. Our growth in e-commerce was 44%, ahead of global channel growth and bringing e-commerce to 13% of turnover.
“We have continued to reshape our portfolio into high growth spaces, acquiring in prestige beauty and functional nutrition, and agreeing the sale of our tea business.
“The major challenge of 2021 has been the dramatic rise of input costs. We responded with pricing actions, delivering underlying price growth of 2.9% for the year, accelerating to 4.9% in the fourth quarter, with full-year underlying operating margin down 10 bps and underlying earnings per share up 5.5%.
“We are focused on driving faster growth from our strong portfolio of brands and markets, and recently announced a major change to create a simpler, more category-focused organisation designed to further improve performance. In 2022, we will manage a significant input cost inflation cycle and continue to invest competitively in marketing, R&D and capital expenditure.
“We have engaged extensively with our shareholders in recent weeks and received a strong message that the evolution of our portfolio assets needs to be measured. We, therefore, do not intend to pursue major acquisitions in the foreseeable future and will conduct a share buyback programme of up to €3 billion over the next two years.”
Unilever expects underlying sales growth in 2022 to be in the range of 4.5-6.5%. Pricing will continue to be strong, with some impact on volume as a result.
Despite the positive results, Unilever said very high cost inflation has been widespread across its markets and is expected to continue. Covid is having an ongoing impact on the operating environment, including in the final quarter of 2021 as new restrictions were implemented in some regions.
In North America and Europe, markets declined in 2021 as Unilever lapped high demand in the prior year for in-home food and hygiene products. Covid impacted India in the early part of the year while in China, the market recovered well in 2021, but economic growth has started to slow.
Markets in Latin America are recovering, with growth driven by higher prices, although macroeconomic volatility remains high. In South East Asia markets are improving following tough restrictions on daily life through 2021. In Turkey, economic conditions deteriorated throughout Q4.
Unilever’s beauty & personal care underlying sales grew by 3.8%, with 3% from price and 0.8% from volume. All categories delivered good growth apart from skin cleansing, which declined following elevated demand in 2020.
Skin care grew in the high single digits, with channels reopening in 2021. Dove refillable deodorant launched in the US and has been well received by consumers. Hair care grew in the mid-single digits with Sunsilk, Dove and Clear contributing and styling in North America being restored to competitive growth.
“The acceleration of Unilever’s operating performance continues,” commented Unilever’s CEO, Alan Jope. “We delivered our fastest underlying sales growth for nine years – 4.5% for the full year, with 1.6% from volume.
“Our €13 billion brands grew 6.4%. Priority markets of China, India and the US grew at 14.3%, 13.4% and 3.7%, respectively. Our growth in e-commerce was 44%, ahead of global channel growth and bringing e-commerce to 13% of turnover.
“We have continued to reshape our portfolio into high growth spaces, acquiring in prestige beauty and functional nutrition, and agreeing the sale of our tea business.
“The major challenge of 2021 has been the dramatic rise of input costs. We responded with pricing actions, delivering underlying price growth of 2.9% for the year, accelerating to 4.9% in the fourth quarter, with full-year underlying operating margin down 10 bps and underlying earnings per share up 5.5%.
“We are focused on driving faster growth from our strong portfolio of brands and markets, and recently announced a major change to create a simpler, more category-focused organisation designed to further improve performance. In 2022, we will manage a significant input cost inflation cycle and continue to invest competitively in marketing, R&D and capital expenditure.
“We have engaged extensively with our shareholders in recent weeks and received a strong message that the evolution of our portfolio assets needs to be measured. We, therefore, do not intend to pursue major acquisitions in the foreseeable future and will conduct a share buyback programme of up to €3 billion over the next two years.”
Unilever expects underlying sales growth in 2022 to be in the range of 4.5-6.5%. Pricing will continue to be strong, with some impact on volume as a result.
