LONDON — Balanced price and volume, strength in emerging markets and growth across the company’s three divisions led to strong sales results at Unilever P.L.C. during the third quarter.
Third-quarter revenues of €12,529 million ($14,411 million) were down 4.8% from €13,166 million, primarily reflecting an adverse translational currency impact of 5.2%. The net impact of acquisitions and disposals, which included the spreads business disposal, reduced turnover by 3.3%, Unilever said. Underlying sales growth, meanwhile, increased 3.8% during the third quarter, with volume growth up 2.4%.
“Growth was high quality, with an acceleration across all divisions and regions compared with previous quarters,” Graeme D. Pitkethly, chief financial officer and executive director, said during an Oct. 17 conference call with analysts. “We increased prices in response to commodity inflation and currency devaluation, and it’s a good sign of the fundamental strength of our brands and our brand investment that strong volume has continued as we’ve priced.
"It’s a good sign of the fundamental strength of our brands." — Graeme Pitkethly, Unilever
“In emerging markets, growth accelerated to 5.6%, and we have maintained good volume growth at 3.4%, which is very encouraging. The strongest performances in the emerging markets were in India and in Turkey, both growing with near double-digit volume in the quarter. In the developed markets, growth was 1.3%. As expected, we saw a recovery in North America following a weaker first half. Whilst in Europe, a combination of good weather, strong execution and strong innovation helped the ice cream business to continue its growth.
“The actions we are taking to evolve our portfolio and build our presence in new channels are working. We’ve so far launched 10 new brands this year, and our e-commerce business is growing at 50% year-to-date.”
Mr. Pitkethly acknowledged some challenges in the business, though, including currency and rising commodity costs, which have put pressure on gross margins, high competitive intensity in some sales, and the shifting retail channel landscape, particularly in Europe and North America.
Underlying sales growth in Unilever’s Foods & Refreshment division during the third quarter improved to 3.2%.
Mr. Pitkethly said ice cream was the main driver of growth, boosted by good weather in northern Europe but also reflecting the company’s innovation and execution efforts in the category.
“Kinder ice creams have been a big success in France and Germany, and Magnum Pints is now the No. 1 U.S. pint innovation for 2018,” he said. “We continue to build our (order form) business through cabinet placement, retail stores and our new on-demand 'ice cream now' business model, which enables consumers to order ice cream to their home exactly when they want it.”
Savory also delivered good performance for Unilever during the quarter, as the company’s Knorr brand continued to modernize its portfolio with more organic and natural innovations, including a new “soup in glass” range. The company’s snack brands — Red Red, Prepco and Mae Terra — performed well in the quarter.
Mr. Pitkethly said Unilever’s transformation of its tea portfolio is continuing with acquisitions like Tazo and Pukka and innovations such as the organic Lipton range. In emerging markets, growth has been driven by good performance in core brands such as Brooke Bond in India.