LONDON — Personal care became Unilever’s largest category during its second quarter when the business, which includes brands such as Dove, Sunsilk and Tigi, reported sales of 3.57 billion euros, or $4.56 billion. That performance represents underlying sales growth, which is calculated using constant exchange rates and strips out the effects of acquisitions and disposals, of 7.8 percent year-over-year.
Dollar figures have been converted at average exchange.
The Anglo-Dutch consumer goods giant reported its total sales increased 12.4 percent at current exchange rates in the quarter ended June 30 to reach 11.75 billion euros, or $14.99 billion, while profits climbed 39 percent to 1.15 billion euros, or $1.47 billion.
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Noting the company had experienced a “good quarter,” Paul Polman, Unilever’s chief executive officer, acknowledged it will face challenges going forward.
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“There can be no doubt that, together with our competitors, we face a tougher second half,” Polman said during a conference call with analysts Thursday morning. “In addition to a cautious consumer in Western Europe and North America, we face difficult comparators from last year, as well as the added burden of rising commodity costs. We are all competing hard, and there is no reason to believe that this is about to change.”
By geographical zone in the second quarter, the company reported underlying sales growth of 8.2 percent in Asia, Africa and Central and Eastern Europe to 4.67 billion euros, or $5.96 billion; an increase of 3.9 percent in the Americas to 3.86 billion euros, or $4.93 billion, and a 2.2 percent downturn in Western Europe to 3.22 billion euros, or $4.11 billion.
Polman said Unilever’s innovation program “is picking up and getting to competitive levels.” He added that products launched within the last two years now generate 33 percent of turnover, a new high for the company.
“I see innovation as the key driver of Unilever’s growth, and I am encouraged by the progress we are making after many years of underinvestment in our brands,” he said.
The company’s sales increased by 9.7 percent to 21.9 billion euros, or $29.13 billion, in the first half, while profits surged by 35 percent to 2.21 billion euros, or $2.94 billion.
Underlying price growth was down 2.6 percent in the half.
“We continue to expect underlying price growth to turn positive toward the end of the year,” said Jean-Marc Huët, Unilever’s chief financial officer, during Thursday’s call. “Underlying volume growth of 5.7 percent in the second quarter brings the [underlying volume growth] for the first half to 6.6 percent. This is the highest recorded by Unilever in over 20 years, albeit against a rather weak first half of 2009, when volume was flat.”