Nov 29, 2017
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Unilever sees personal care business returning to higher growth 'soon'

Nov 29, 2017

Anglo-Dutch consumer goods maker Unilever expects new products and increased distribution to help its personal care business return to growth above 4 percent soon, after a recent slowdown. 

​Generating 20 billion euro per year, the division is often seen as its most attractive but posted only 2.4 percent growth in the first nine months of the year.

New brands such as subscription-based skincare regimen Skinsei have contributed to the growth in Unilever's personal care category - Instagram: Skinsei

“I‘m not going to give an exact date,” said Alan Jope, head of the unit that includes Dove soap and Sunsilk shampoo, during an investor event in New Jersey that was broadcast online. “But I don’t think I’d be standing here with this tone and this cocky, relaxed position if it wasn’t going to come around quite soon.”

The event was held at Unilever’s New Jersey offices that was simultaneously broadcast over the internet, Jope declined to say exactly when the rebound would happen.

In explaining the slowdown, Jope pointed to lower growth of the global market, weakness in Indonesia and Brazil - two of its big markets - and increased competition from local rivals, such as Patanjali in India and Wardah in Indonesia.

While the first two issues were temporary, Jope said local competition was a long-term phenomenon, and largely why Unilever was focusing on increasing its agility in local markets.

He cited several new brands that would aid the unit’s growth going forward, including prescription-strength Dove products for people with psoriasis or eczema; Skinsei, a personalized, subscription-based skincare regimen sold directly to consumers; and a beauty brand called Love Beauty and Planet.

Since rebuffing an unexpected $143-billion takeover offer in February from Kraft-Heinz, Unilever has been under pressure to prove it can quickly deliver comparable returns as a standalone company.

Investors were disappointed last month when Unilever reported a surprise slowdown in sales, citing lost market share to smaller rivals in certain areas.

Its shares have fallen more than 7 percent since then, but remain 26 percent higher than they were before Kraft’s approach.

Over the past two years, Unilever has worked to make the most of its global scale in areas where it counts, like back-office functions and procurement, and to be quicker with new products targeted for local markets.

The company cited this new structure for being able to launch a low-calorie, high-protein Breyers ice cream in the United States in only five months, capping the damage done by the start-up Halo Top, which quickly gained market share.

Another reason for the new structure is costs, and Unilever on Wednesday reiterated its targets for savings of 6 billion euros by 2019, two-thirds of which will be reinvested into the business, and a 20 percent operating margin by 2020.

Over the next few years Unilever expects to generate more of its sales from alternative channels like health and beauty stores, delivery services and online. It is launching new products to suit those channels and pursuing partnerships with firms like Just Eat and Deliveroo to expand distribution.

The company said it is nearly done with the stock buyback plan it announced in April soon after the Kraft approach, and its plans to dispose of its spreads business were progressing well.

Reuters reported earlier on Wednesday that the auction process for the business, which could be worth more than $7 billion, has narrowed to three bidders.

Unilever said on Tuesday it favored collapsing its dual-headed, Anglo-Dutch structure into a single entity, but delayed a decision whether it would be based in Britain or the Netherlands, avoiding for now a choice with political dimensions amid ongoing Brexit negotiations.

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