Unilever is to plough an extra 200m a year into advertising and promotion after its annual results, announced this week, revealed flat sales in many of its markets.
Worldwide sales on continuing operations fell five per cent last year at current exchange rates. However, Unilever’s restructuring of recent years has paid off, with net profit margins hitting an all-time high of seven per cent.
Analysts say the company will have to focus on increasing sales rather than cost-cutting as a way of boosting profits. One analyst comments: “There is to be a switch of emphasis away from restructuring, which is coming to an end in Western markets. Unilever has got to start looking at the top line to build profits. Restructuring charges of 200m a year will be diverted into advertising and promotion.” The company spent 3.4bn last year on advertising and promotion.
Marketing Week has revealed that Unilever is to reorganise the way it plans ad campaigns to increase the efficiency of its spend, and will divert resources out of TV commercials into posters, press and new media (MW February 11).
Sales on continuing operations fell five per cent to 27.1bn at current exchange rates, and pre-tax profit rose three per cent to 3bn. In Europe, sales fell four per cent to 12.7bn after disposals and as a result of cold weather hitting ice-cream sales.
But the launch of Persil Tablets has had a positive impact. In North America, sales grew two per cent after selling off parts of the Unilever business. The company remains non-committal about the possibility of the Elizabeth Arden division being sold.
Co-chairman Maurice Tabaksblat will be succeeded by Antony Burgmans, head of the European ice cream and frozen food business. The other co-chairman is Niall FitzGerald.