Unilever reported a slight increase in volume in its food segment, consistent with the company's goal of delivering volume-driven growth. Unilever reduced its price growth in some areas due to commodity deflation.
Increase in volumes
Overall volume growth was 2.6% for the first half of this year, compared to a volume growth rate of 2.2%. In the 1st quarterUnilever CEO Hein Schumacher said the company hopes to grow by increasing its sales volume.
The Nutrition category has plateaued in its volume growth. Sales are driven by the “power brand” Knorr and Hellman's. These two brands together represent more than 2/3 of total sales.
Fernando Fernandez, Unilever's COO, said growth in the ice cream category was "clearly below our expectations". Underlying volume growth was -1, which was even worse than the negative volume growth of 0.9 1Q3Q in the first quarter. Shortfalls were an issue in China due to tougher market conditions, and in Europe due to bad weather in early summer. Unilever Separation of iceThe project will be completed by 2025.
Europe also returned to volume growth after a growth rate of -1.5% in the first quarter. In these results for the first half of this year, Europe saw a volume increase of 0.5%.
Fernandez said Unilever's price growth was also slowed by the reversal of the commodity cycle and the return to moderate commodity inflation.
Unilever's results in figures
Turnover reached 31.1 billion euros
Unilever's sales increased by 4.1%.
– Volume growth was 2.6%
Underlying operating profit increased by 17.1%
Nutrition saw volume growth of 0%, under-price growth of 3.2% and underlying sales growth of 3.2%.
– Underlying growth in ice cream sales was 0.6%.
Innovative growth
Unilever wants to focus on innovation. Investments in branding and marketing have been increased to 0.7 billion euros, or 15.1 % of the company's turnover.
Schumacher said that "we have changed a little bit in terms of innovation." We want the average size of our innovation to double this year. This means that we will make fewer innovations, but bigger ones.
A deceleration in prices?
Schumacher says that "prices remained moderate" in the first half of 2024. The rate of price growth has slowed significantly.
Prices in Q2 2020 increased by only 0.6% for ice cream and 2.2% for nutrition, compared to 11.8% and 12.1% respectively in Q2 2023. (Unilever Q2 2023) What is the reason?
Schumacehr said the company has adjusted prices to reflect the deflationary effect of commodities. This is to ensure that the volume story we have been discussing continues to grow.
Nestle is a similar product.Unilever expects inflation to return to normal levels after recent spikes. Unilever may have seen some anomalies, such as an increase in the popularity of private labels. Schumacher says that when inflation normalizes, things should “stabilize a little bit.”
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