Unilever’s first-half results showed an increase in underlying sales growth (USG) in its important beauty operations, with the company saying its performance during the period supports its full-year confidence as it beat analyst expectations.
Hourglass
It said USG was 3.4% with volume growth of 1.5% and price growth of 1.9%. But overall turnover of €30.1 billion was down 3.2%, impacted by adverse currency effects and disposals.
The company has a huge portfolio of brands including foods and homecare products. But looking specifically at the Beauty & Wellbeing and Personal Care divisions, actual sales fell 0.8% in the former to €6.5 billion and fell 5.9% in the latter for the same total figure.
Yet USG was up for both operating units with Beauty & Wellbeing rising 3.7% and Personal Care up 4.8%.
For Beauty & Wellbeing, which makes up 21% of turnover, USG included 1.7% from volume and 2% from price. Growth was led by continued momentum in Wellbeing, which was partially offset by subdued growth in Beauty.
Hair Care was flat, with low-single digit price growth offset by a decline in volume. Dove grew, supported by a significant relaunch featuring fibre repair technology and refreshed packaging. But growth was offset by a decline in Clear, which was impacted by slow market growth in China, and a volume decline in TRESemmé.
Core Skin Care delivered low-single-digit growth, with performance varying across brands and markets. Vaseline and Dove grew in double-digits supported by “innovation and strong execution”. This was partially offset by declines in China and Indonesia, where it’s resetting its business.
Prestige Beauty was flat as the market remained subdued. Hourglass, Tatcha, and K18 continued to grow in double-digits though, while Paula’s Choice and Dermalogica declined.
Underlying operating profit for the Beauty & Wellbeing unit was €1.3 billion, down 3.7% versus the prior year. And the underlying operating margin decreased 60bps as it increased brand and marketing investment behind key innovations and market development, while the gross margin remained flat against last year.
For Personal Care, which accounts for 22% of turnover, the USG of 4.8%, included 1.4% from volume and 3.3% from price.
Performance was led by Dove, which grew in high-single-digits with strong volume and positive price. Second quarter volumes were impacted by a decline in Latin America where significant share gains were offset by subdued markets.Deodorants and Skin Cleansing both grew in low-single-digits.
Underlying operating profit was €1.4 billion, down 9.8% versus the prior year. This included the impact from disposals such as Elida Beauty, which reduced Personal Care turnover by 5.8% in the first half. The underlying operating margin decreased 90bps as a slight improvement in gross margin was offset by a strong step-up in brand investment, particularly in the US and premium segments.
