Unilever pursuing growth despite difficult times

UNILEVER SRI LANKA recorded a 11.4% turnover growth in first half ‘07 over the same period last year.

The domestic business which accounts for 76% of the overall business grew 13.9%, with market share gains in most key categories such as fabric cleaning, skin cleansing, skin care, margarines, oral and hair care.

Unilever’s bulk and ‘ready to drink’ (RTD) tea along with exports to Maldives which contributed 24% to the overall revenue, grew by 4.1% during this period.

Despite satisfactory top-line growth, the steep escalation in the price of palm oil, the principle raw material used in the manufacture of soap, together with other inflationary pressures have taken a toll on the company’s profitability in the first half.

Even though palm oil prices increased by 30% in the first half year, prices of soaps were increased only by 5% as Unilever has refrained from passing on the full effect of the cost increases to the consumer.

The resulting impact on profitability has to some extent been mitigated through aggressive cost effectiveness projects. However, with palm oil prices projected to rise a further 37% in the second half of the year and with the rupee too expected to devalue, the company said that it will be hard pressed not to pass on more of the cost escalations to consumers.

Commenting on the first half ‘07 performance, Chairman of Unilever Sri Lanka Amal Cabraal said, “despite the challenging economic environment, Unilever Sri Lanka remains on track in pursuing its vision to double its business over the next five years and will continue to invest in its brands, its people and its manufacturing facilities.

We will also continue to bring in the latest global know-how in areas such as marketing, retailing and manufacturing, contributing towards the country’s development”.

In the first half of 2007, 96% of Unilever’s revenue has been generated out of locally manufactured products. Unilever maintains three production facilities employing over 1,150 people.