Despite overall market conditions remaining challenging in 2017, Unilever reports underlying operating margin up 1.1%.
The numbers reflected the roll-out of a savings programme that more than offset commodity cost headwinds.
Underlying sales growth excluding spreads was 3.5% with underlying earnings per share up 10.7%. The company revealed free cash flow up €0.6bn to €5.4bn, including a one-off payment of €0.6bn to pension funds. Net profit increased 16.9% to €6.5 bn
Commenting on the results Paul Polman, Unilever’s CEO said: "2017 has once more been a year of major change for Unilever with the acceleration of the 'Connected 4 Growth' programme, that we announced in 2016. With the implementation of a more agile, consumer-facing organisation, we are seeing quality and speed of innovation further improve.”
He added: “At the same time, we have significantly stepped up the delivery from our savings programmes and continued the evolution of our portfolio with 11 acquisitions announced and completed in the year as well as the announcement of the disposal of the spreads business. All of this is making Unilever increasingly competitive in light of fast-changing consumer and technology trends.
On the subject of acquisition, Unilever has today agreed to buy Betty Ice, the largest ice cream brand in Romania, as the food producer bolsters what is already the world’s largest ice cream business.
Unilever, which makes Wall’s and Ben Jerry’s ice cream, saw its ice cream business in the US suffer in 2017 following the entry into the market of Halo Top, which took a hefty slice of market share with its low-calorie offering.
So far Unilever have not provided details on the costs related to the Betty Ice deal.
But it is not just the US where Unilever faces threats to existing market share. In China, Kao the Japanese manufacturer, which amongst other things makes disposable nappies, has made no secret of the fact that it intends to compete head on with the likes of Unilever and Procter & Gamble. It has already increased online volume sales in China over recent years.
Despite challenging and competitive markets, Polman argues that Unilever is well-placed for a strong 2018.
“Our priorities for 2018 are to grow volumes ahead of our markets, maintain strong delivery from our savings programmes and to complete the integration of Foods & Refreshment as well as the exit from spreads.
“We expect this will translate into another year of underlying sales growth in the 3% - 5% range, and an improvement in underlying operating margin and cash flow, that keeps us on track for the 2020 targets."