Unilever has posted a 26% jump in annual profits as the consumer goods giant benefited from lower restructuring costs and proceeds from business disposals – but also accelerating from underlying sales in the fourth quarter.
The company, which makes brands including Flora, Magnum and Knorr, booked net profit of EUR4.6bn (US$6.33bn) for 2010, up 26% on the year. At constant exchange rates, net profit increased 18%.
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Operating profit was also up 26%, hitting EUR6.34bn. Excluding currency fluctuations, operating profit had climbed 19%.
Unilever’s bottom line and operating profit benefited from lower finance charges but also a reduction in restructuring costs compared to 2009. The group also enjoyed higher proceeds from business disposals in 2010. Underlying operating profit, excluding restructuring and M&A, increased 12% in 2010 to EUR6.62bn – or 6% at constant exchange rates.
The company’s annual turnover was up 11.1% at EUR44.26bn – or 3.6% once currency fluctuations were taken from the numbers. Unilever’s underlying sales increased 4.1% during 2010 – but were up 5.1% in the fourth quarter of the year.
Unilever’s annual sales volumes increased 5.8% – compared to 5.1% in the fourth quarter – but, in the last three months of the year, the company’s prices were flat. Across 2010 as a whole, prices were down 1.6%.
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By GlobalData“We delivered strong volume growth, particularly in emerging markets, which continued to be the engine of growth,” CEO Paul Polman said. “We gained volume share in all regions driven by stronger innovations, significant increases in marketing investment and the extension of our brands into new territories.”
Polman said Unilever also improved margins through “a strong savings programme”. Over 2010, Unilever’s underlying operating margin increased by 20 basis points. However, rising commodity costs meant margins fell by the same amount in the fourth quarter.
“Despite the intense competition and the return of commodity cost volatility, our objectives remain: profitable volume growth ahead of our markets, steady and sustainable underlying operating margin improvement and strong cash flow,” Polman said.
Unilever’s shares were down 0.9% at 1841p at 11:21 GMT this morning.
Click here for the full statement from Unilever and check back later for further coverage – including comment from City analysts and a conference call with Unilever president of foods, home and personal care, Michael Polk.
