Unilever share price: H1 sales drop at current exchange rates

Unilever (LON:ULVR) has updated investors on its second performance this morning.

**Highlights from Unilever’s statement:**
Paul Polman: Chief Executive Officer statement
“Our first half results further demonstrate the progress we have made in the transformation of Unilever to deliver consistent, competitive, profitable and responsible growth. Despite a challenging environment with slower global economic growth and intensifying geopolitical instability, we have again grown profitably in our markets, competitively and driven by strong innovations.

This consistency of performance, achieved during a period of high volatility and accelerating change, shows that our long-term focus is paying off. We are seeing the benefits from delivery against the four differentiated category strategies that continue to guide investment in our brands, our infrastructure and our people.
We have been preparing ourselves for tougher market conditions in 2016 and do not see any sign of an improving global economy. Against this backdrop we continue to drive agility and cost discipline, implementing the key initiatives announced at the end of last year: net revenue management, zero based budgeting and ‘Connected 4 Growth’ which is the next stage in our organisational transformation. Our priorities continue to be volume-driven growth ahead of our markets, steady improvement in core operating margin and strong cash flow.”
Our markets: Consumer demand remained weak and in the markets in which we operate volumes have slowed further, with market volume growth low in emerging markets and negative in Europe and in North America.
Unilever overall performance: Underlying sales growth in the first half was broad-based and driven by market share gains across the four categories which continued to deliver progress against their strategic priorities: Personal Care and Foods achieved improved growth while maintaining strong profitability. Home Care and Refreshment improved margins while continuing to grow competitively. Emerging markets grew 8.0% driven by good volume growth in Asia and price growth in Latin America. Developed markets grew 0.2% with volume growth more than offsetting price deflation in Europe.
Gross margin improved by 80bps to 42.7% driven by margin-accretive innovations and acquisitions as well as our discipline in driving savings programmes. In local currencies brand and marketing investment was sustained at the absolute level of the prior year and as a percentage of turnover was down by 50bps due to sales leverage and cost efficiencies. Overheads were up by 80bps from the lapping of gains on pension plan changes in the prior year and the higher overheads ratio of new business models including the acquired prestige brands. Core operating margin improved by 50bps to 15.0%.
Personal Care
Personal Care volumes improved across all sub-categories driven by innovations that grow the core of our brands and extend into more premium segments. Deodorants performed strongly, supported by new variants of the successful dry sprays in North America and by the roll-out of Rexona Antibacterial that provides 10x more odour protection into 36 new countries. We are addressing the higher growth male grooming segment with the launch of the new Axe range, opening the brand to a broader audience. Good growth in hair was supported by the successful Sunsilk re-launch and by the TRESemmé Beauty-Full Volume range with a unique reverse conditioning system. In skin cleansing Lifebuoy demonstrated strong volume-driven growth across emerging markets driven by our handwashing campaign.
Core operating margin was up 10bps driven by higher gross margins and helped by brand and marketing efficiencies.
Foods
Growth in Foods accelerated with a good performance in savoury and dressings and a continued decline in spreads as a result of the market contraction in developed countries. Savoury showed good growth driven by cooking products in emerging markets, innovations around naturalness such as Knorr Mealmakers with 100% natural ingredients in Europe and our local brands such as Bango in Indonesia and Robertsons in South Africa. Hellmann’s grew strongly in dressings helped by the convenient squeeze packaging with proprietary easy-out technology, the launch of Carefully Crafted and Organic variants as well as the expansion into Italy and Belgium. In spreads Flora highlighted its plant-based health credentials with a new advertising campaign and introduced a dairy-free variant in the United Kingdom.
Core operating margin was down 70bps due to gains on pension plan changes in the prior year and higher restructuring costs.
Home Care
Home Care continued to deliver broad-based growth, ahead of our markets. This was driven by innovations in higher margin segments and the continued roll-out of the new Omo with enhanced formulation and improved cleaning technology which has now reached 27 countries. After the success of Omo pre-treaters and stain removers in Brazil we are rolling them out in Latin America, South East Asia and China. Fabric conditioners grew at double-digit rates, helped by new variants of Comfort Intense with its concentrated, double-encapsulated fragrance technology that delivers long-lasting freshness. In household care growth was driven by Cif’s premium Power and Shine sprays and Domestos toilet blocks in Europe as well as the continued expansion of our brands into new markets such as Iran.
In line with our strategy, core operating margin improved by 250bps driven by improved mix and cost savings.
Refreshment
Ice cream delivered good growth driven by margin-accretive innovations behind premium brands, such as the new Magnum Double range, the Ben & Jerry’s ‘Wich sandwich and dairy free range, as well as premium desserts under Breyer’s Gelato and Carte D’Or Sorbet. We continued to develop the value segment with a new yoghurt variant of the smaller-sized Cornetto at a recommended resale price of €1. In leaf tea, we have been building our presence in more premium products with T2 and machine-compatible tea capsules. Lipton and PG Tips continued to extend in the faster-growing green and speciality teas segments where we are still under-represented.
Core operating margin was up 90bps driven by improved mix and savings in ice cream as well as brand and marketing efficiencies.
As of 07:19 BST, Thursday, 21 July, Unilever plc share price is 3,575.00p.