Jul 21, 2016
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Unilever spruces up profits but sees gloomy global outlook

Jul 21, 2016

Dutch food and cosmetics giant Unilever posted Thursday a rise in sales for the first half of 2016, boosted by mens' grooming products, but warned of "no sign of an improving global economy".

Unilever's Axe men's grooming line is one of the bright spots in its financial results.

Total sales clocked in 2.6 percent higher at 26.3 billion euros ($29 billion) and net profit stood at 2.7 billion euros, up by 2 percent from 2015.

Unilever said the first half of the year was marked by "a period of high volatility and accelerating change".

"Despite a challenging environment with slower global economic growth and intensifying geopolitical instability, we have again grown profitability in our markets," Unilever chief executive Paul Polman said in a statement.

Unilever fared particularly well in its personal care division with deodorants and dry sprays, it said.

The Rotterdam-based retail giant said it was "addressing the higher growth male grooming segment with the launch of a new Axe range, opening the brand to a broader audience."

An analyst said Unilever is shifting focusing on mens' personal healthcare products, evident also in its announcement Wednesday that it has bought California-based start up the Dollar Shave Club in a deal believed to be worth around $1 billion.

The move is also one of the first times ever Unilever has bought a company that sells directly to the public said Stefano Puntoni, marketing professor at Erasmus University's Rotterdam School of Management.

"Unilever has now bought a company that bypasses traditional retailers and sells directly to consumers and that's a very significant development," Puntoni told AFP.

Sales in North America were driven by "a strong delivery in our innovations in deodorants, dressings and ice cream," said Unilever, which makes Magnum, Ben & Jerry's and Cornetto.

Growth was driven by "solid volume gains in Asia", while Russia and Australia returned to positive growth and Turkey grew strongly led by ice cream and tea.

China however remained "broadly flat with rapid growth in e-commerce offset by declines in other channels," Unilever said.

Sales in Europe also continued to remain flat. Despite growth in personal care, home care and ice cream "the contraction in the margarine market impacted our foods performance, particularly in the United Kingdom and France," it said.

Unilever chief Polman said the group's priorities continued to be "volume-driven growth ahead of our markets, steady improvement in core operating margin and strong cash flow."

But Polman warned: "We have been preparing ourselves for tougher market conditions in 2016 and do not see any signs of an improving global economy."

Unilever was founded in 1930 and has grown into a massive conglomerate, employing some 173,000 people around the world. It sells consumer goods ranging from Knorr soups, Bertolli olive oil and Rexona deodorant to Domestos toilet blocks.

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