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Exchange Rates Dent Unilever

July 24, 2014

Despite an increase in underlying growth (3.7%) and emerging markets (6.6%), Unilever's second quarter revenue fell 5.5% to 24.1 billion euros ($32.4 billion at current exchange rates)due to an 8.5% decline related to currency exchange.

"The first half again shows consistent top and bottom line progress despite significant headwinds," said Paul Polman, chief executive officer. "Our markets have been challenging and we have experienced a further slow-down in the emerging countries whilst developed markets are not yet picking up."

According to Polman, Unilever continues to grow ahead of its markets driven by strong innovations such as compressed deodorants in Europe, Regenerate Enamel Science in oral care and Skip Dual Action capsules. At the same time Unilever continues to invest for the long term with its program to take its brands into new countries with the launches of Lifebuoy in China, Omo in Arabia and Clear in Japan.

"We made further progress in strengthening our portfolio with the acquisition of a majority stake in Qinyuan, the Chinese water purification business, and the disposals of the Ragu and Bertolli pasta sauces brands in the United States and, more recently, the Slim Fast business," said Polman. "In a tougher cost environment, project Half is on track and is enabling us to drive cost savings and simultaneously increase organizational agility. We remain focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow."

More specifically,Unilever said personal care continued to grow ahead of slowing markets underpinned by a strong innovation program. Deodorants saw the continued success of the compressed aerosol range in Europe, good growth for Rexona with the successful Do:More campaign, the positive impact of new communication behind Dove Invisible Dry and the introduction of new packaging for Axe and the aforementioned launch of Regenerate Enamel Science in the UK. This is a premium proposition and is the first toothpaste and serum system that regenerates enamel with exactly the same mineral which makes up tooth enamel.

In hair care, Clear was successfully introduced in Japan and relaunched in key markets such as Brazil and China. TreSemmé benefited from the success of the 7 Day Keratin Smooth range, and Dove Oxygen Moisture made good progress in the US. Skin cleansing saw continued strong growth for Lifebuoy reflecting the success of the proposition to protect against ten infection causing germs and the introduction of the brand in China. Dove continued to deliver broad-based growth and Lux benefited from the relaunch in China and South East Asia. In skin care Fair & Lovely delivered strong growth and the Dove Purely Pampering range was extended into nourishing body oil.

Laundry growth remained competitive and well-balanced between volume and price. Following a good response to the launch in France under the Skip brand, Persil Dual Action capsules were launched in the UK. Omo was re-introduced in Saudi Arabia and Skip Small & Mighty liquids were launched in South Africa. In household care the company grew ahead of slowing markets. Cif multi-purpose sprays and Domestos Zero Stain toilet cleaner were launched in Vietnam and Indonesia and Domestos Ultra Power was launched in Russia.
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