Unilever has delivered a strong set of half year results with turnover up 11.5% to €25.4bn and underlying sales growth of 7%. The manufacturer's focus on continuous improvement, which has led to supply chain savings of more than €3bn in the last three years, has been a key part of performance.
Transformation to sustainable growth company
Unilever's double-digit turnover growth and sales growth of 7% has been achieved against a challenging marketplace; consumer confidence is fragile and the food and grocery market remains intensely competitive. Growth has been driven by pricing and a strong performance in emerging markets (sales growth of 11.4%), this is against continuing 'sluggish growth' in developed markets where volume growth continues to be negative. Paul Polman, CEO at Unilever commented:
"Solid and consistent first half results provide further evidence that we are making progress in the transformation of Unilever to a sustainable growth company. Despite deteriorating global economic conditions and a competitive environment which remains intense, we again delivered volume growth ahead of our markets and gained value share across the majority of our business. Our performance reflects continued investment in innovation, brand-building and people, whilst keeping discipline on both costs and execution."
Driving out supply chain waste
Unilever's drive for continuous improvement has been a key part of the manufacturer's performance. Focusing on waste Unilever has worked to simplify the number of SKUs in each category. Looking specifically at its tea range, the manufacturer has reduced tea formulations by 27%, the number of flavours it offers by 20% and the number of pack forms by 19%. By considerably optimising its tea offering Unilever has simplified its supply chain, enhancing efficiency, improving service level and reducing costs.
Reducing supply chain costs year-on-year
Also central to Unilever's strategy is to systematically remove cost year-on-year, which according to the company is more productive than implementing a one-off major restructuring programme. Unilever has achieved this in the supply chain, delivering more than €3bn in savings over the last three years. A further €2bn in cash from lower working capital has also been achieved. Unilever has pledged to continue driving down cost and aiming for similar savings from its supply chain in 2012 and 2013.
Unilever expects the market to remain volatile
Going forward, Unilever expects continued volatility especially in commodity costs and the economic environment. The company will focus on delivering profitable volume growth, sustainable operating margin improvement and strong cash flow driven by increased capital discipline.
As part of its continuous improvement programme, Unilever will continue to focus on agility, discipline and performance, ensuring it is well placed to deal with challenges ahead.