By Saabira Chaudhuri 

The owner of Dove soap and Ben & Jerry's ice cream wants to up its game in the U.S., India and China.

Unilever PLC on Thursday said it would sharpen its focus on those three countries as part of a new strategy aimed at driving sales growth. It also plans to invest more in e-commerce and prioritize fast-growing categories including skin care, nutrition and plant-based foods.

The consumer-goods giant said the U.S., India and China already make up nearly 35% of its sales and are forecast to account for 60% of global economic growth by 2030.

To capitalize, Unilever said it would seek acquisitions in those countries, redeploy marketing and R&D staff, and boost spending on developing new products targeted at those markets.

The company also plans to accelerate investments in e-commerce, which it said had grown strongly through the pandemic and now makes up 9% of sales.

In the U.S., Unilever said it sees hair care, beauty products and its vitamins, minerals and supplements businesses as areas where it can accelerate growth. It said the performance of its dressings business, which includes Hellmann's mayonnaise, had improved, but that it continues to work on hair care, where it has been battling rival Procter & Gamble Co. in shampoo.

"We're not yet where we want to be in the U.S., that's the main call out, " Chief Financial Officer Graeme Pitkethly said.

His remarks come as Unilever reported a 2.5% fall in annual sales to 50.72 billion euros ($61.04 billion), hurt by currency changes, and a 0.8% fall in net profit to EUR5.58 billion.

Underlying sales growth, which strips out currency changes and M&A, came in at 1.9%. That was helped by a 7.7% rise in North America, driven by consumers buying food ingredients to cook at home, ice cream to eat at home, and hand wash.

However, the company's adjusted operating margin dropped by 0.6 percentage point, worse than the 0.1 percentage-point drop analysts had expected. Unilever shares were down 5% in afternoon trading in London.

Unilever attributed the weaker profit margin to lower sales of more lucrative lines like hair-styling products, deodorant and out-of-home ice cream as consumers stayed in more during the pandemic. The company also faced higher costs to clean its factories and hire temporary workers among other measures driven by Covid-19.

U.S.-focused rival P&G, by contrast, last month said its quarterly gross margin increased by 1.7 percentage points from a year earlier. P&G said it sold more high-priced items in home care and appliances as well as in North America.

Unilever said it expects pandemic-related costs to continue to weigh on its gross margin this year, while warning that the performance of its higher-margin product categories depends on how the pandemic progresses.

Still, the company said growth in beauty and personal-care products had climbed in markets such as China, India and parts of Latin America where restrictions to curb the virus have been eased.

Looking ahead, Mr. Pitkethly warned that raising prices could be tricky. Unilever expects mid- to high-single-digit commodity inflation this year, driven by food ingredients, palm oil and tea, he said, but also expects cash-strapped consumers to opt for cheaper products.

Already in India, consumers have switched to cheaper laundry brands such as Wheel from pricier ones such as Surf Excel as they launder fewer office shirts and school uniforms, Mr. Pitkethly said.

"We will have to be on top of our game on pricing," he said.


Write to Saabira Chaudhuri at


(END) Dow Jones Newswires

February 04, 2021 11:00 ET (16:00 GMT)

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