Unilever’s personal care business has continued to gain market share and boost its bottom line.
Personal care posted underlying sales growth of 7.35% in the fourth quarter and full-year. While hair care was the driving force, all sectors including skin care, cleansing and deodorants, grew 5% to 10%, said Paul Polman, CEO, during a conference call. Dove, TRESemme, Clear Scalp & Hair and Sunsilk hair brands performed strongly.
Foreign currency impact reduced personal care turnover 2.8% in the quarter to 4.52 billion euro ($6.18 billion), with annual sales flat at 18.056 billion euro ($24.69 billion). Core operating margin for personal care, its most profitable sector, rose 80 basis points to 17.8 for the year, with core operating income of 3.2 billion euro ($4.37 billion), up from 3.08 billion euro ($4.21 billion).
Even in the difficult U.S. market, personal care advanced. “Our personal care business is growing share in 100% of our business,” said Paul, who also noted that due to continued weakness and ecommerce competition, U.S. shelf prices could decline in coming months.
Development of a Personal Care Innovation Center in London is underway to keep Unilever “at the leading edge of consumer trends,” said Paul. “It will enable us to accelerate our innovation process by allowing us, for example, to rapidly translate concepts into products, which can then be tested quickly in multiple markets.” Dave Lewis, president of personal care, has been recruiting beauty industry talent to join the staff. Stretching personal care brands into “premium” spaces is also top of mind.
An efficiency program to save 500 million euro ($684 million) annually to be outlined by mid-year will likely reduce headcount, cut underperforming skus and sharpen marketing programs. Digital, now 17% of the advertising budget, will play a bigger role, as supermodel Miranda Kerr puts a new famous face on the Clear brand in the U.S.
With most growth coming from emerging markets, that’s where investment will accelerate. Africa, rural India, Indonesia and untapped regions of Brazil are being eyed. Dove Repair Expertise is already in 50 countries and Axe Apollo in 70 countries.
Overall, Unilever had underlying sales growth of 4.3% for the year, with turnover down 3% to 49.8 billion ($68.1 billion) due to currency headwinds. Net profit increased 9% to 5.3 billion euro ($7.2 billion). For 2014, it expects growth to continue in the 3% to 5% range.