Unilever H1 underlying sales growth excluding spreads 2.7%
Underlying sales growth excluding spreads was 2.7% which was almost entirely driven by volume growth across all divisions. USG including spreads was 2.5%.
Growth was adversely affected by the situation in Brazil which reduced USG in the first half by around 60bps and 120bps in the second quarter. Emerging markets grew by 4.1% with an improved contribution from volume of 3.3%, while price growth was modest in a lower inflation environment.
Sales in developed markets were slightly up as volume growth was mostly offset by continued competitive price deflation in Europe and North America. Turnover decreased 5.0% to €26.4 billion, which included an adverse currency impact of (8.9)% and 1.9% from acquisitions net of disposals.
Gross margin improved by 60bps to 43.7%, primarily driven by positive mix and company's ‘5-S’ savings programme. Brand and marketing investment was up 20bps. Compared to the prior year, the company stepped up the absolute level of brand and marketing investment, focused on media investment while continuing to drive efficiencies in advertising production.
Due to a further reduction in the underlying cost base, overheads reduced by 40bps. As a result, underlying operating margin improved by 80bps to 18.6%. Operating margin was down 50bps to 17.0%, mainly due to a gain on disposal of the AdeS soy beverage business in the prior year. ■