Unilever believes strong volume growth is sustainable

Posted by James Ferre on 7th August 2009

Consumer products giant Unilever has seen sales rise 4.1 per cent as volumes were surprisingly resilient – showing 2 per cent growth. The sales growth came at a cost, however, with net profit falling by 15 per cent as margins declined.

“While conditions remain difficult in many markets, I am encouraged by the return to volume growth across all regions and the majority of countries and categories,” Paul Polman, Chief Executive Officer of Unilever, said. “More of our brands are improving share again behind strong innovations, greater consumer value, increased marketing support and better execution. We continue to focus on restoring volume growth while protecting margins and cash flow for the year as a whole.”

In their Asia Africa division volumes rose 1.3 per cent, on the back of good results in their key developing markets.

The Dutch-based maker of Dove and Streets said they didn’t expect a quick return of the high spending consumer but believed they could ride out any further softening.

“Whilst major ticket items will be first affected, we also see grocery spend drop by about 10% when unemployment hits. Fortunately our categories are less affected and we believe that this will continue to be the case,” Mr Polman said.

“In this ‘new world’ there is a recalibration of the value equation – and we expect a tougher competitive environment from both Private Label, who are benefitting short term, and from Branded competition.”

Mr Polman said they were closely monitoring trends in all their markets and discovering that a one-size-fits-all approach does not work, even in developed markets.

“Research in the UK and Germany shows, for example, that it is not always private label that benefits,” he noted. “Whilst some consumers are trading down, they are not necessarily fleeing to discounters – rather they are looking for value without frills. An equally large section of the population is however moving up, looking for premium positioned market leaders that are well supported, differentiated and have strong innovations.”

“It is this deep understanding of the consumer that, over time, will separate the winners from the losers,” Mr Polman concluded.