Unilever beauty ops continue to grow, but margin growth is elusive

By

Sandra Halliday

Published
Feb 10, 2022

Unilever on Thursday reported its “fastest underlying sales growth in nine years” for fiscal 2021, with a 4.5% uplift that divided down as a 2.9% increase based on higher prices and a 1.6% volume rise.

But that didn’t please investors and its share dropped by as much as 4% in early trading, continuing a run of dips for the business.

The consumer products giant — which has a huge beauty division — said turnover increased 3.4% to €52.4 billion in the year, with a positive impact from acquisitions and a negative impact from currency. And underlying operating profit increased 2.9% to €9.6 billion, although the underlying operating margin decreased by 10bps.

While the company is reorganising its operating units, within the existing Beauty & Personal Care unit, it saw turnover up 6.2% to €5.8 billion in Q4 and up 3.8% to €21.9 billion in the full year. 

Of that full-year rise, 3% was from higher prices and 0.8% from volume rises. All categories delivered good growth, apart from skin cleansing, “which declined following elevated demand in the prior year”. 

Prestige Beauty grew in double-digits “with all brands benefiting from e-commerce and a recovery in beauty channels compared to the prior year”. Innovations in Prestige Beauty include Dermalogica's biolumin-c and sound sleep cocoon, and Ren's zero waste packaging.

Skincare grew in high-single-digits as channels reopened in 2021. Vaseline performed strongly throughout the year, “supported by several premium innovations across brightening, therapeutics and hydration”. 

Deodorants grew as the market continued to recover, with good growth and restored competitiveness in North America. Dove refillable deodorant launched in the US and “has been well-received by consumers”. 

Haircare grew in mid-single-digits with Sunsilk, Dove and Clear contributing to this and “styling in North America being restored to competitive growth”. 

But the underlying operating margin in Beauty & Personal Care was flat, “with high material inflation in palm oil having a particularly high impact on gross margin, despite stepped up pricing”.