Unilever sales volumes rise on discounting

By Simon Pitman, 06-Aug-2009

Related topics: Financial

Unilever has seen its sales volumes for the European market rebound on heavy discounting, although net
profits continue to dive.

Second quarter sales grew by 2 per cent in volume and fell 1 per cent on a like-for-like basis to reach €10.46bn.
Like-for-like sales for the first six months remained virtually unchanged at €19.96bn.

Underlying sales growth was 4.1 per cent for the quarter.

The performance was even stronger for the group’s personal care sales, with like-for-like sales up 5.4 per cent
to €2.99bn, while sales for the six month period were up 4.6 per cent to $5.80bn.

Discounting saves the day

The company said that discounting had enabled it to raise sales volumes in all regions, particularly in Europe,
where in the second quarter volumes rose by 1 per cent, compared to a fall of 1.2 per cent for the first six
months of the year.

All other regions showed stronger increases during the quarter, with like-for-like sales increasing 8.2 per cent in
the Africa and Asia region, to €3.85bn, while sales in the Americas rose 4.9 per cent to €3.33bn.

But discounting proved to be very market and product specific, as overall the company reported that it had
raised group prices by an average of 2.1 per cent during the quarter.

Net profits continue to slide

Reflecting the tough market conditions, net profits were down by 15 per cent for the second quarter to €833m,
whereas they fell 31 per cent for the first six months of the financial year, to €1.64bn.

CEO Paul Polman said that he was encouraged by the results, particularly the sales volume increases, and went
on to stress that the combination of sales volumes growth while protecting margins, would continue to be the
future focus for the company.

As part of its strategy for further discounting, the company says it will be introducing ’30-day plans’ on specific
products that have continued to show signs of declining sales.

Unilever’s results compare well with long-standing rival P&G, which yesterday announced that net sales had
fallen 11 per cent during its fourth quarter to reach $18.66bn.

Analysts pointed out that the US company had lost out to heavy discounting by competitors as well as the fact
that consumers had continued to switch to cheaper solutions such as private label brands.
Unilever acts over Greenpeace’s palm oil
claims
By Mike Stones, 18-Dec-2009

Related topics: Products & Markets

Unilever has halted all purchases of palm oil from Indonesian company PT SMART after a
Greenpeace report alleged that its parent group Sinar Mas is engaged in widespread illegal
deforestation and peatland clearance in Indonesia.

According to the pressure group’s report, Illegal forest clearance and RSPO (Round Table on
Sustainable Palm Oil) greenwash: Case studies of Sinar Mas, the company is “…engaging in
practices which release vast amounts of carbon dioxide into the atmosphere and help Indonesia win
the title of the world’s third largest greenhouse gas emitter, after China and the US.”

Sinar Mas’s actions break Indonesian law and highlight how membership of the RSPO alone is not
sufficient proof of a company’s environmental credentials, alleges Greenpeace.

A Unilever spokesperson told FoodNavigator.com: “The Greenpeace claims about (PT SMART)
breaking RSPO guidelines are too serious for us to ignore.”

Sustainable sourcing

Marc Engel, the company’s chief procurement officer, added: “Unilever is committed to sustainable
sourcing. Therefore, we have notified PT SMART that we have no choice but to suspend our future
purchasing of palm oil.”

“If PT SMART are able to come forward with concrete proof that they are not involved in
unacceptable environmental practices then we would certainly re-consider our position.”

Earlier this year the company conducted an independent audit of its major suppliers which revealed
some areas of concern. Unilever has promised to remedy these problems with the individual
companies concerned.

One of the world's largest buyers of palm oil, Unilever purchases 1.5m tonnes a year for use in a
wide range of products including shampoo, soap, margarine and ice cream. The company reports
what it terms “unprecedented demand for palm oil” fueled by rising population and the growing
affluence of India and China together with the growing popularity of biofuels.

“Around three-quarters of the world's oil palm is grown in Indonesia and Malaysia where much of the
recent expansion of the industry has been onto peatland and into tropical rainforest,” according to
Unilever’s website.

“The clearance and burning of South-East Asia's peat forests release 2bn tonnes of greenhouse
gases every year. According to some estimates, deforestation in Indonesia alone accounts for 4 per
cent of global greenhouse gas emissions – making it the third-highest emitter behind the US and
China.”

Sustainable

But the company believes the link between the cultivation of oil palm and climate change can be
broken by creating a market that is sustainable and certified.
No one from Sinar Mas was available for comment before publication.

But following the showing of what it describes as “a Greenpeace theatrical show," entitled “Sinar Mas
- Forest and Climate Criminal," the company responded: “Climate, location, following the productivity
of land availability and labour are better able to make Indonesia a major player in the world's oil palm
plantation sector.

“In addition, the development of oil palm plantations that are part of current government programs
tend to use marginal lands that have been degraded. That's why the government encouraged the
industrial sector - Sinar Mas by PT Sinar Mas Agro Resources and Technology Tbk(PT SMART
Tbk.)…to develop this sector to promote environmentally friendly principles.”
Unilever outsources end-user services to
Unisys
By Simon Pitman, 13-Nov-2009
Related topics: Financial
Unilever says it will secure over €1bn of savings in its IT division from the outsourcing of end-
user services to IT services provider Unisys.
The contract will provide support for 60,000 staff throughout the company’s global operations, serving
as an end-user support mechanism for staff involved in all of the company’s business activities –
personal care, food and home care.
The contract was brokered through Unilever’s UK subsidiary and will see management and support
services provided to Unilever staff in North America, Latin America, the Caribbean, Europe, Russia
and Eastern Europe.
Unisys says that its support teams will be based in its service centres worldwide, including major
facilities in Budapest, Hungary and Bangalore, India.
Unisys and Unilever established first contract in 2005
Unilever first contracted in Unisys in November 2005, when it contracted out IT support services on a
larger Unilever IT project and the work relationship has been gradually developed since then.
Although the financial terms of the deal have not been revealed, the companies say that the initial
contract is for a four year period, with an option to extend it by one year once the contract period is
finished.
The services will include support and development of worktop applications, access to IT facilities for
staff that travel for work, together with support and self-help solutions to help staff fix IT-related
problems.
Peter Opalka, Unilever vice president of global client services said the move would serve to help in
“leveraging innovative, cost-effective IT management practices to empower our employees with
greater flexibility and choice in how they perform their roles.”
Savings since 2007 exceed €1bn
Unilever estimates that since plans were first introduced to restructure its IT operations in 2007, it has
so far saved an estimated £960m (€1.07bn).
The move to outsource the company’s IT support services is part of a global initiative to create cost
savings and greater efficiencies throughout Unilever’s business divisions.
In line with the cost saving goal, the company also announced this week that it is combining its US-
based antiperspirants, deodorant and hair care group with its skin care division.
North American business restructuring
The move will create a US personal care business unit based at the consumer giant’s North
American headquarters in Englewood Cliffs, New Jersey.
As a result Unilever says it will close its Michigan Avenue office in Chicago by July 2010, a move that
will affect some 200 personnel who are currently employed at the location.
Since 2006 Unilever has integrated a number of its operations in North America with the aim of
improving efficiencies and giving it greater financial resources to develop its brands.
Between 2008 and 2009 the company concentrated on integrating its global supply chain, while in
2007 it integrated its North American ice cream business into its US operations, while combining its
Connecticut and Illinois offices in 2006.