Unilever Closes Out Its Tumultuous Year With Strong Fourth Quarter

Unilever’s sales were better than expected in the fourth quarter and — perhaps more surprising — profits also rose even as packaged goods firms are increasingly squeezed by retailers, online and off.

“The maker of Dove soap and Ben & Jerry’s ice cream — which spent most of last year reviewing its business after rebuffing a $143 billion takeover bid in February — said underlying sales rose 4%. Analysts on average were expecting 3.7%, according to a company-supplied consensus,” reports Reuters’s Martinne Geller. “That marks an improvement from 3% in the first half and 2.6% in the third quarter.”

Unilever also sold 3.2% more products in the fourth quarter, “helped by the launch of six new brands last year, including a new line of personal care products called Love Beauty and Planet,” Geller continues.



Give credit to Dutch CEO Paul Polman, who is scheduled to retire next year but is showing no signs of slowing down. Quite the opposite, as Financial Times’s Matthew Vincent would have it.

“What time does Paul Polman wake up, reach for his new premium format Dove shower foam with ‘improved sensorial experience,’ wield his recently acquired Dollar Shave Club razor, spray on some Lynx Adrenaline Charge Up Anti-Perspirant, spread Marmite on his Flora-covered toast, sip his PG Tips tea, and prepare to berate investors for their short-termism?” Vincent asks. “A lot earlier than he used to, it would seem. Because, in the past 12 months, the Unilever chief executive has already hit, or moved faster towards, his targets for 2020.”

Vincent says Polman “puts the step change down to having his new category teams and innovation pipeline fully in place. This enabled the launch of five new personal care brands in 2017 — something unheard of before his growth plan made strategists and foam scientists more entrepreneurial.”

Not to mention his cost-savings efforts.

“To defend Unilever from another takeover bid, Polman has cut costs further to widen the operating margin, bought back 5 billion euros ($6.2 billion) of shares, and agreed to offload the spreads operation to private equity firm KKR & Co.,” writes Bloomberg “Gadfly” columnist Andrea Felsted. 

Its frugal ways extends to how it’s spending its marketing dollars — namely not so much at outside entities.

“Last year, Unilever was able to invest an additional €250m into media buying and in-store advertising after slashing the number of agencies it worked with and bringing certain elements of its marketing mix in-house. Updating on its performance in 2017 … chief financial officer Graeme Pitkethly said that strategy will be continued into the coming year,” writes Jennifer Faull for The Drum

“Overall, the ‘5-S’ savings program and zero-based-budgeting strategy have delivered savings to the tune of $2 billion. The FMCG giant said its level of brand and marketing investment was flat versus the prior year but savings made by diverting work through its in-house advertising agency U-Studio and ‘eliminating waste in those areas where we have over-saturated traditional media channels’ came to €250m,” Faull continues.

“Sales were particularly strong in Asia, increasing 5.9% and driven by increasing online sales in China, and strong demand in India and Pakistan,” according to an AFP dispatch. “But the North American market was ‘weak throughout the year,’ while European markets ‘remained challenging with subdued volume growth and continued price deflation in several countries.”

“Unilever’s focus on emerging markets, coupled with a portfolio that includes high-end skin-care products and fancy mustard, means the company has more of a buffer from price pressures than its rivals …Pitkethly said in an interview” with the Wall Street Journal’s Saabira Chaudhuri.

“We have less reliance than our rivals like P&G on categories under pressure like razor blades and diapers,” he said. “We see the same trends but we don’t see the same impact.”

In a snippet from a CNBC interview yesterday, Polman talks about how Unilever is both developing new brands and acquiring them, citing its actions in the global tea market as an example. On Wednesday, it announced its acquisition of Betty Ice, the main local ice cream producer in Romania with annual sales of €30 million. 

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