Unilever’s beauty segment performed well thanks to higher prices

Unilever presented its full-year 2022 results on Thursday, and the global consumer products giant says it has “balanced rising prices, volumes and competitiveness to tackle inflation”.

Underlying sales growth for the company as a whole was 9%, with revenue increasing by 14.5% to €60.1 billion. Underlying operating profit increased by 0.5% to €9.7 billion, while reported operating profit increased by 23.6% to €10.8 billion. Net profit for the year increased by 24.9% to 8.3 billion euros. The company also said that revenue in the fourth quarter increased by 11.4% to 14.6 billion euros.

Unilever added that “we will return to strong core sales growth in 2023, with volume results and competitiveness improving as the year progresses. We will continue to set prices and drive our cost savings programmes, so that we can invest in our brands and achieve better margins.”

The company has an extensive portfolio of consumer products, spanning beauty, personal care, food and home care.

As regards beauty and personal care, the results were largely due to the group’s ability to raise prices without being too affected by volumes.

The Beauty and Wellness segment accounts for 20% of turnover and sales growth for the full year was 7.8% to €12.3 billion, while total turnover increased by 20.8%. In the fourth quarter, basic sales growth was 7.7% to €3.2 billion, with total revenue up 19%.

According to the company, the 7.8% annual sales increase was due to 7.5% pricing and 0.3% volume growth. The growth was driven by the prices of the basic Skincare and Haircare ranges, while benefiting from the volumes of Luxury Beauty and Health & Wellness.

The Hair Care range grew by around 5%, thanks to strong results from Sunsilk and Nexxus. Growth was driven by Latin America, India and Turkey, partially offset by Europe and China, where sales were hit by pandemic-related restrictions.

Skincare grew about 3%. South Asia and Southeast Asia saw strong growth, helped by Lifebuoy and the launch of premium Vaseline innovation Gluta-Hya, while AHC sales declined in North Asia.

Luxury Beauty posted another year of double-digit growth, with strong contributions from Paula’s Choice and Hourglass, which continued its expansion in China, as well as Living Proof, which entered the premium hair restoration category. Liquid IV and Olly drove strong double-digit growth in health and wellness. The acquisition of Nutrafol hair health products was completed in July.

In Personal Care, which represents 23% of the group’s turnover, sales growth during the year was 7.9%, with turnover reaching 13.6 billion euros. In the fourth quarter it was 9.1%, with a turnover of 3.5 billion euros.

However, underlying operating margin decreased 340 basis points due to higher input costs and higher increases in branding and marketing investments across all of its divisions.

The annual increase in sales is due 12.1% to prices and 3.7% to volumes. The decline in volumes was greatest in the Skin Cleansing segment, which was particularly affected by raw material cost inflation.

Deodorants did well, with double-digit growth and positive volumes. Technology and innovation have especially contributed to this, such as Rexona’s 72-hour protection technology.

Leather cleaning grew by about 8%, with sharp price increases in response to rising input costs. While this resulted in a decline in sales volume, sales volume held up better in North America, supported by innovations like Dove Deep Hydration Body Wash with Microbiome Nourishing Serum. Dollar Shave Club sales declined during the year and the company announced an impairment charge related to the business.