Unilever cites improved marketing efficiency for profit bump

Unilever claims that a “brand first” approach to business and more efficient use of its €3bn (£2.6bn) marketing budget helped it post a better than expected 7.1% sales increase for the second quarter.

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The Flora, Dove, Lynx and Ben & Jerry’s owner says sales for the three months to 30 June grew to €11.9bn (£10.4bn), its best quarterly performance since 2008. For the first half, sales grew to €22.8bn (£19.8bn), up 5.7% on the same period last year.

Operating profit increased 8% to €3.3bn (£2.9bn).

Growth was driven by gains in emerging markets such as India and Mexico, offsetting weaker growth in “challenging” developed markets in North America and Western Europe.

It also cited “a good balance” between price increases and volume growth. The volume of products sold increased 2.2% in the second quarter, while prices grew by 3.5% to offset higher commodity costs.

More efficient deployment of its €3bn (£2.6bn) advertising and promotions budget also helped improve performance, the company adds although it cut spend by 1.5% compared to the same period a year ago, when the spend was “exceptionally high”.

Paul Polman, Unilever CEO told analysts on a conference call: “Our profile of growth reflects the strategic choices we are making to concentrate spending behind brands that have the most strategic potential for growth.

“Remaining more competitive is the right thing to do and we have put our brands first without compromise. We now have a much more robust business and can match the competition without undermining our brands.”

He adds that its decision to restructure its business into four category based divisions “takes the organisation to the next level” by simplifying its ’go to market’ structure, while “driving faster and better innovation and better organising around the consumer”.

By developing a beauty strategy within its personal care division, he adds, Unilever can compete better with rivals such as L’Oreal, which are already organised in the same way,

He adds that the restructure will become one of the companies “defining moments”.

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