LONDON — After ramping up advertising and promotional spend and adjusting product prices, Unilever reported its second-quarter sales increased 1 percent to 10.46 billion euros, or $14.24 billion. Net profits, meanwhile, took a 15 percent hit in the period, coming in at 833 million euros, or $1.13 billion.
Dollar figures have been converted at average exchange for the period.
“We set out to reignite volume growth whilst protecting cash flow and margin,” Paul Polman, the Anglo-Dutch consumer goods giant’s chief executive officer said during a conference with financial analysts Thursday morning. “I am encouraged by the progress we have made. Organic growth of 4.1 percent in quarter two was well-balanced with 2.1 percent coming from price and 2 percent from volume. The volume growth represents a clear step up from the negative trend we had seen in previous quarters.”
Polman said volume growth was “widespread, across all categories and countries.” He added the company had raised product prices in some markets last year to offset rising commodity costs.
“This weakened our consumer value propositions,” he said. “We have now brought our prices back into line and are happy with our relative price positions.”
Unilever’s personal care division, which includes the Dove, Sunsilk and Tigi brands, reported second-quarter organic sales up 5.4 percent to 3 billion euros, or $4.08 billion.
In the first half of this year, the company reported flat sales at 19.96 billion euros, or $26.65 billion, and profits down 31 percent to 1.64 billion euros, or $2.18 billion.
Earnings per share for the six-month period came in at 0.53 euros, or $0.71, representing a 33 percent downturn. Before the impact of restructuring, disposals and impairments, EPS dropped 13 percent. The company, which boasts a portfolio of products ranging from condiments to conditioners, said key drivers for that dip included 3 percent dilution from disposals, 6 percent from a finance charge linked to pensions and 3 percent from a higher tax rate than in the first half of 2008.
By geographical region in the second quarter, the company reported organic growth of 8.2 percent in Asia, Africa, Central and Eastern Europe to 3.86 billion euros, or $5.25 billion; an increase of 4.9 percent in the Americas to 3.34 billion euros, or $4.54 billion, and a 1.1 percent downturn in Western Europe to 3.27 billion euros, or $4.45 billion.
Polman said key priorities for the full year remain restoring volume growth while protecting cash flow and margins.
“This is, without any doubt, the longest and deepest recession during the post-World War period and, whilst it might have bottomed out, we do not believe that there are any signs of a fast recovery,” he added. “In fact, we expect many parts of the world, such as Western and Eastern Europe, still to soften before even bottoming out.”
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