Unilever’s beauty operations have seen impressive growth in the fiscal year 2021, with the company reporting its fastest underlying sales growth in nine years. However, despite this positive performance, investors were not satisfied, leading to a drop of as much as 4% in the company’s shares during early trading.

In terms of financial results, Unilever experienced a 4.5% increase in underlying sales, with higher prices accounting for a 2.9% uplift and a 1.6% rise in volume. The company’s turnover also rose by 3.4% to reach €52.4 billion, driven by favorable impacts from acquisitions but impacted negatively by currency fluctuations. Furthermore, the underlying operating profit saw a 2.9% increase to €9.6 billion, although the underlying operating margin decreased by 10 basis points.

Despite ongoing reorganization efforts in the Beauty & Personal Care unit, Unilever achieved strong growth in this segment. The turnover for Q4 increased by 6.2% to €5.8 billion, and the full-year turnover reached €21.9 billion, representing a 3.8% increase. This growth was primarily driven by a 3% increase in prices and a 0.8% rise in volume. The Prestige Beauty category experienced double-digit growth due to the influence of e-commerce and a recovery in beauty channels compared to the previous year. Noteworthy innovations within Prestige Beauty include Dermalogica’s biolumin-c and sound sleep cocoon, as well as Ren’s zero-waste packaging. Skincare also witnessed high-single-digit growth as channels reopened in 2021, with Vaseline performing exceptionally well throughout the year. Deodorants and haircare also experienced growth, especially in North America.

However, despite the positive growth in the Beauty & Personal Care unit, the underlying operating margin remained steady. Unilever attributed this to high material inflation in palm oil, which significantly impacted the gross margin despite the company’s efforts to increase pricing.

Overall, Unilever’s beauty division has demonstrated substantial growth in fiscal 2021. Despite facing various challenges, the company remains committed to innovation and expanding its presence in key markets. With ongoing reorganization efforts and a focus on addressing cost pressures, Unilever aims to achieve sustainable margin growth in the future.

Useful links:
1. Unilever’s official website
2. Reuters article on Unilever’s fiscal 2021 results