Unilever Reports Higher Underlying Sales for 1st Half, Sales Miss Estimates -- Update

By Saabira Chaudhuri

LONDON--Unilever PLC on Thursday reported higher underlying sales for the first-half of the year as strength in its emerging markets helped offset the impact of lower ice-cream sales in Europe and North America on the back of cooler weather.

But sales missed analyst estimates as volume growth came in weaker than expected.

The Anglo-Dutch company, whose brands include Dove soap and Magnum ice cream, reported net profit of 3 billion euros ($3.35 billion) for the six months to June 30 compared with 3.03 billion euros a year earlier. Revenue declined 0.9% to EUR26.13 billion from EUR26.35 billion driven by the sale of Unilever's spreads business last year but climbed 3.3% on an underlying basis, which strips out currency movements and mergers and acquisitions. The rise was driven by a 1.2% rise in volume and a 2.1% rise in price. Analysts had expected underlying sales growth of 3.5%.

Unilever--which owns Ben & Jerry's, Magnum and Talenti ice cream brands--said second quarter growth was suppressed by 0.5 percentage points due to weak ice-cream performance. It blamed poorer weather, particularly in Europe, after two years of very strong summers that had buoyed sales.

Average rainfall across 12 European cities was three times higher in April and May than the prior year while average hours of sunshine were down 9% in April from a year earlier and 25% in May, according to Jefferies.

All that contributed to an overall decline of 0.7% in underlying sales growth for developed markets in the first half of the year, compared with a rise of 6.2% in Unilever's emerging markets.

Underlying sales dropped 0.6% in Europe, further dampened by price deflation, while in North America they were flat.

In the beauty-and-personal-care division, underlying sales rose 3.3% in the first half of the year as deodorants sold strongly and new skin cleansing products like Dove bath bombs and foaming handwash did well. In Unilever's smaller homecare arm, underlying sales jumped 7.4% as consumers traded up to pricier products that promise more benefits.

Under Alan Jope, the company's former personal care head who became Unilever's chief executive earlier this year, Unilever is intensifying efforts to market its brands as having a strong purpose. It's also continued to beef up its beauty and personal-care arm as part of a longer journey to pivot away from slower-growth food. In April, it acquired French cosmetics and skincare brand Garancia, and Tatcha, a skincare brand that uses green tea, algae and rice to make moisturizer and cleansers.

Write to Saabira Chaudhuri at Saabira.Chaudhuri@wsj.com

(END) Dow Jones Newswires

July 25, 2019 03:31 ET (07:31 GMT)

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