Unilever PLC, a personal care and grocery producer said a 1.7% currency impact pushed its second quarter earning by 5.5% on a year on year basis.
On the overall, turnover increased 5.5% to EUR27.7 billion, which included a positive currency impact of 1.7% and 0.8% from acquisitions net of disposals.
It would be recalled that Unilever Nigeria its local unit said in the early part of the quarter that it will be looking at disposing of its spreads (butter) business as a result of a strategic alignment.
There is strong rationale to dispose of the unit bearing in mind that its spreads unit has been on a continuous decline. However, the company noted that the rate of decline in spreads has slowed to 3.7% as sales growth in emerging markets partially offset the continued market contraction in developed countries.
Commenting on the results, CEO Paul Polman says: “Our first-half results show continued growth well ahead of our markets and a substantial step-up in profitability despite the persisting volatile global trading environment. It once more shows the validity of Unilever’s long-term compounding growth model. Our change programme ‘Connected 4 Growth’ (C4G), which started in the autumn of 2016, is delivering ahead of plan.
“The transformation of Unilever into a more resilient, more competitive and more profitable business is accelerating. C4G is making our business even more agile, less complex and increasingly responsive to fast-changing consumer trends. The resulting increase in innovation speed and effectiveness will allow us to grow ahead of market. We see this as a proven way of delivering long-term shareholder value. C4G also enables a further step-change in margin expansion and cash flow delivery, as we secure efficiencies from the roll-out of our savings programmes and benefit from the investments we have made over the last few years.
“The actions we are taking keep us on track for another year of underlying sales growth ahead of our markets, in the 3–5% range. We anticipate accelerating growth in the second half of the year driven by the phasing of our innovation plans and a step-up in brand and marketing investment. We now expect an improvement in underlying operating margin this year of at least 100 basis points and strong cash flow.”