LONDON — The transformation continues at Unilever P.L.C. The London-based company on July 1 officially began operating baking, cooking, and spreads as a standalone unit, and also has ramped up its innovation capabilities in an effort to drive competitive top-line growth.
Net profit in the first half ended June 30 was €2,658 million, down 11% from €2,995 million in the same period a year ago, but sales increased 12% to €26,991 million, aided by currency tailwinds and a 2.9% underlying sales growth.
“The first-half results again demonstrate the progress we are making to transform Unilever into a more resilient company, one that is able to deliver the consistent, competitive, profitable and responsible growth that you are now getting accustomed to, hopefully,” Paul Polman, chief executive officer, said during a July 23 conference call with analysts. “This is now the seventh year in a row that we’re actually delivering that.”
Mr. Polman said the company’s Food unit grew 1.4% in the first half, boosted by savory outperforming the competitive set with good growth.
Getting the new baking, cooking, and spreads unit up and running July 1 as a standalone unit was “not an easy feat,” Mr. Polman said.
|Paul Polman, c.e.o. of Unilever.|
“It’s been a major transformation with new processes, reporting systems, legal structures all delivered on time,” he explained. “Now, it’s too early, after only three weeks, to see any impact of the change yet, but I am certain that it will bring a lot more focus to our strategy of repositioning that part of the business to a more attractive segment.”
The Refreshment unit also improved, increasing 2.7% behind the strength of premium brands. Tea also performed well, but Mr. Polman said it is still not to its full potential. Overall, he said Unilever’s priorities in the Refreshment unit are to “step up cash flow in ice cream and move to more value-added premium segments.”
“We’re upgrading the mix in ice cream with premium brands, like Magnum and Ben & Jerry’s, the Breyers Gelato range in the U.S., and the recently acquired Talenti,” he said.
To address competition in the marketplace, Mr. Polman said Unilever has stepped up its innovation capabilities in a number of ways.
“We changed our R.&D. organization to increase its effectiveness by embedding it within the categories,” he said. “This has allowed each category to allocate resources across discover, design, and deploy to meet their specific needs. For example, in both home care and personal care we have shifted significant resources upstream to the discover and the design programs, and see that coming through in bigger, more effective innovations.
“We’ve also created a science group, which we call the strategic science group, which looks out for emerging science and technology so that we can stay in touch with, and sometimes ahead of, many developments, particularly in the biological and physical science.
“We’re also increasingly leveraging our partnership with external research bodies and key suppliers. These now drive 70% of our open innovations.“And finally, we’re introducing new ways of working, enabled by I.T. tools, to drive for speed and efficiency. … The new approach is already delivering results. Our innovation pipeline continues to get stronger every year, and is well aligned to our growth ambitions. The projects in the funnel will deliver 20% more turnover than they did at the end of 2013.”