Unilever Plc (UN) Q1 2012 Earnings Call April 26, 2012 3:00 AM ET Executives Jean-Marc Huët – CFO James Allison – Head, IR Analysts Celine Pannuti – JP Morgan Michael Steib – Morgan Stanley Harold Thompson – Deutsche Bank Marco Gulpers – ING Bank Martin Deboo – Investec David Hayes – Nomura Jeremy Fialko – Redburn Partners Robert Waldschmidt – Merrill Lynch Presentation Jean-Marc Huët
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Strong performance in Personal Care and emerging markets, those were the key drivers behind our growth; so overall, a pleasing start, albeit against a weak prior-year comparator in Europe. And as you all know, impacted by some positive one-offs which affected all competitors.Turnover for the quarter was €12.1 billion, that’s up 11.9%. Volume growth contributed 3.5% and price at 4.7%, and that mainly reflects the carryover effect of price increases taken last year. In a period when pricing has been high, our positive volumes demonstrate the strength of our brands and the impact of our much improved innovation programs, although we have a long way to go. Net acquisitions contributed 2.7% and this reflects the consolidation of Alberto Culver, which, as you know, we completed in May last year, and Concern Kalina more recently, the leading local Russian personal care business that we acquired in December. FX was positive at 0.5%. Emerging markets now accounts for 56% of our turnover in the first quarter. Underlying sales growth at 11.9% and healthy volume at around 5% plus. And this growth was widespread. Underlying sales growth in the so called BRIC countries at 13%, but other markets importantly also played their part, countries such as Indonesia, Vietnam and various markets in North Africa, but also the Middle East. As you know, we are well positioned in emerging markets. For well over the last 20 years, our volume growth has averaged around 5%. And we’ve delivered in good as well as bad times. In the last four quarters, our underlying sales growth has been in double-digit territory. Our Q1 results, we believe, are just another data point that suggests that emerging markets will drive Unilever’s growth for many years to come. However, as much as we are confident about our ability to outperform markets, there are many indicators that suggest that the global macroeconomic environment will remain very difficult.
While the growth prospects for consumer demand remain healthy in emerging markets, the fundamentals in developed markets continue to be weak. Consumer sentiment in Europe continues to suffer and this has been going on for a while. Disposable incomes are being squeezed and households are reining in their budgets, spending less and making whatever they have go farther.In the US where economic indicators perhaps are more mixed, we still see 45 million people claiming benefits via food stamps. Despite these challenging market conditions, which we expect will continue, we are in a good position as Unilever. Our brands cater for the everyday needs of billions of consumers. We have iconic brands that consumers trust and that offer outstanding value for money with great innovations. This is why we are confident that we will continue over time to outperform our markets. Now let me talk through some of the highlights of our category performance. Personal Care momentum continues. Again, we performed ahead of the market, with underlying sales growth in the quarter of over 10%, 6% coming from volume. Our hair care business continues to do well as the overall portfolio is really starting to work. For example, Dove Damage Repair and Clear, a standout performance. But they’ve also been complemented by the rollout of Axe Hair in Europe. We’ve also launched TRESemmé in Brazil, where now our overall hair care market share is growing. But this is a highly competitive category. In parts of the world, where competitors are under pressure, we still see this at times translated into price. We also had great results in skin cleansing, where Dove again grew strongly, benefiting from the continued success of Dove Nutrium shower gels and the rollout of Dove Men+Care, which is now in more than 40 markets. It’s an example of bigger, better, faster innovations. But we also had Lux and Lifebuoy also contributing strongly. Turning to deodorants, another solid quarter, double-digit growth in Latin America, Africa and North Asia extending our worldwide leadership position. Read the rest of this transcript for free on seekingalpha.com