Unilever N.V. (UN - Free Report) posted healthy third quarter 2012 sales results. The company recorded organic (excluding the impact of acquisitions and disposals) sales growth of 5.9% in the third quarter. The increase was driven by both volume and pricing gains of 3.4% and 2.4%, respectively. Increased investment in innovation and brand building also contributed to the growth.
Emerging markets underlying sales expanded 12.1%, while developed markets declined in the quarter.
Personal Care:The segment delivered underlying sales growth of 8.0% in the third quarter, driven by volume gains of 5.6% and improved pricing of 2.3%.
The Hair section was positively driven by the rollout of its brands in new markets. Tresemmé hair product was a success in Brazil and was also launched in Indonesia and India. The launch of Clear grew across the markets in United States. Axe hair growth was positive in Europe and was rolled out across Turkey. Dove Damage Therapy continued to boost sales in many markets in the quarter.
Deodorants performed well driven by Dove’s healthy performance, and Axe’s aggressive advertising campaigns. Growth in the Oral division was driven by the new innovations in toothpaste category. Pepsodent 123 was launched in Indonesia and Vietnam, while Pepsodent was launched in South Africa.
Home Care: The segment delivered underlying sales growth of 11.0% in the quarter, riding on volume growth of 7.0% and price increase of 3.8%.
The segment’s laundry division benefited from the launch of Comfort Anti-Bacterial in the Indonesia and Vietnam and the rollout of New Omo stain removal. Strong performance of Sunlight dish wash boosted sales in the Household care division.
Foods: The segment’s underlying sales declined 0.4% in the quarter due to 1.4% volume decline, partially offset by a 1.0% positive impact due to pricing.
The segment suffered as the spreads volumes declined due to high pricing in key markets of 2012. However, liquid margarine continued to boost sales in Europe. Hellmann’s brand delivered a strong performance in Brazil, driven by several promotional campaigns of the company. Knorr baking bags also gained momentum in most key countries.
Refreshments: The segment delivered underlying sales growth of 6.8% in the quarter, owing to volume growth of 3.3% and pricing increase of 3.4%.
The category was driven by growth in ice cream, which was driven by the launch of Magnum Infinity across Europe, Turkey, Mexico and Australia, and with the recent launch of Magnum in the Philippines and Malaysia. Beverages category improved in the quarter, with Lipton tea delivering double-digit growth in the Middle East and the re-launch of Lipton Yellow Label in Russia.
We expect an uncertain macro-economic environment, going forward. Though the company forecasts volume gains and strong free cash flow in the near-term, commodity cost inflation will continue to be a headwind.