Unilever declared on Thursday a good start to 2015 as first-quarter sales received a boost by favorable currency movements and a shift to more premium products.
The producer of Dove soap, Rexona deodorant, Signal toothpaste and Lipton tea reported that Q1 sales rose by 12.3% from a year earlier to €12.8 billion, including a positive currency impact of 10.6%. Unilever projects full-year sales growth of 9% at current exchange rates.
Underlying sales growth, which excludes the impact of currency shifts, acquisitions and disposals, was 2.8%. This exceeded analysts projections of 2.1% and compared to a 3.6% jump in underlying sales in the first three months of 2014.
“The actions we have been taking to put us on track for higher levels of growth are starting to pay off,” said Unilever CEO Paul Polman, who warned in January that he did not expect much improvement in 2015.
“Despite high levels of currency and commodity volatility, we are now starting to see more tailwinds than headwinds in our markets, and expect our initiatives to deliver a further improvement in volume growth in the remainder of the year,” Mr. Polman added.
The company marked underlying sales growth in all four product categories, namely Personal Care, Foods, Refreshment and Home Care, with varying contributions from volume and price.
Unilever said that European markets remain weak, although volumes grew 1.6%, with underlying sales falling by 0.4% as pricing was down across all categories. Sales in North America jumped 0.5%.
Total sales in developed markets saw a 0.7% drop, while emerging markets, which account for 59% of sales, grew by 5.4%, driven largely by price increases. Emerging markets have seen divergent trends, the company said, with India marking an improvement and China conditions stabilizing, while Brazil and Russia faced a deterioration.
Unilever has been struggling lately after years of solid revenue growth as developing markets stalled, and has been trying to cushion the effect by offering premium versions of its products and raising prices. The Personal Care category saw a 2.6% price jump in the first quarter, the same as Refreshment, while prices of Home Care products rose by 2.3% and Foods dropped 0.1%, for a total increase of 1.9% across the company. Total volumes were up 0.9%.
“There is improved momentum in the business,” said Jean-Marc Huët, finance director, cited by the Financial Times. “The Chinese business has recovered better than expected and food, especially savoury and mayonnaise, has had a good start, boosted by Easter.”
Unilever Plc was up 3.85% at 3 047 pence in London at 9:36 GMT, marking a one-year gain of 16.21%. The company is valued at 87.90 billion pounds. According to the Financial Times, the 18 analysts offering 12-month price targets for Unilever Plc have a median target of GBX 2 900, with a high estimate of GBX 3 300 and a low estimate of GBX 2 290. The median estimate represents a -1.16% decrease from the previous close of GBX 2 934.
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