Unilever released its annual report for 2023. Throughout the year, the company achieved a turnover of €59.6 billion, marking a slight decrease of 0.8% compared to the previous year. This decline follows last year’s milestone of surpassing €60 billion in turnover before experiencing a downturn once again. Net profit amounted to €7.1 billion, reflecting a decrease of 13.7%, with diluted earnings per share at €2.56. Basic sales saw a growth of 7.0% for the year, with a marginal increase in sales volume by 0.2% and a notable price increase of 6.8%.
The hair care business experienced strong growth
This is the first annual report since Hein Schumacher took office as the new CEO of Unilever in July of last year. For the full year of 2023, the company’s turnover amounted to €59.6 billion, marking a slight decrease of 0.7% compared to the previous year. Following the milestone of surpassing €60 billion in turnover for the first time last year, there was a subsequent decline. Net profit stood at €7.1 billion, representing a decrease of 13.7%.
Hein Schumacher said, “Today’s results show an improving financial performance, with the return to volume growth and margins rebuilding. However, our competitiveness remains disappointing and overall performance needs to improve. We are working to address this by improving our execution to unlock Unilever’s full potential.”
In terms of business divisions, Beauty & Wellbeing exhibited robust performance throughout the full year, with underlying sales increasing by 8.3%, driven by a balanced growth in both volume (4.4%) and price (3.8%). Volume growth notably accelerated to 6.3% in the fourth quarter, particularly driven by strong performance in Hair Care and Health & Wellbeing categories.
Unilever highlighted that the strong full-year performance reflects sustained growth in Prestige Beauty and Health & Wellbeing segments, which now contribute a quarter of Beauty & Wellbeing’s turnover. Additionally, successful relaunches of key Hair Care and Skin Care brands played a significant role, leveraging the company’s science and technology capabilities and supported by increased investment across key markets to enhance their competitive edge.
Furthermore, hair care experienced mid-single-digit growth, fueled by both price and volume increases, particularly showing strong performance in Latin America and Turkey. Sunsilk achieved double-digit growth for the year following a successful brand relaunch.
Clear also saw mid-single-digit growth, propelled by innovative advancements. Unilever introduced its first clinically proven anti-dandruff formula, enriched with niacinamide concentrate to repair and fortify the scalp’s skin barrier. After a successful relaunch in China last year, this formulation has now been extended to Thailand, Turkey, and Brazil.
Unilever highlighted that its primary Skin Care segment experienced low-single-digit growth primarily due to price adjustments. Vaseline achieved double-digit growth, achieving a turnover of €1 billion in 2023. Building on the success of its Gluta-Hya range launched in South East Asia two years ago, Unilever expanded the platform by introducing serums and a Pro-Age range, thus broadening its consumer base by extending patented technology to additional products and new markets like India. However, in North Asia, AHC experienced a double-digit decline due to strategic adjustments in the cross-border trade channel.
Additionally, Unilever reported that its Personal Care division achieved a solid underlying sales growth of 8.9% throughout the year, with balanced contributions from both price and volume increases, primarily supported by the consistent performance of Deodorants. In the fourth quarter, all three categories within Personal Care experienced positive volume growth.
Deodorants saw double-digit growth driven by robust volume increases, notably in Europe and Latin America. Rexona, in particular, experienced double-digit growth, with its line of products featuring 72-hour sweat and odor protection technology now available in over 100 markets.
Skin Cleansing achieved mid-single digit growth with volume increases. Lux experienced double-digit growth, propelled by enhanced skincare benefits in soap bars through its ProGlow technology. In the United States, Dove saw mid-single digit growth, aided by the relaunch of its Body Wash featuring new packaging and 24-hour renewing MicroMoisture technology.
Large-scale divestment of non-core assets
In December of last year, Unilever announced that it had agreed to sell Elida Beauty to the Boston-based private equity firm Yellow Wood Partners LLC.
Unilever had initially planned to sell Elida Beauty in 2021 as part of its ongoing strategy to divest non-core brands. However, following the failed attempt to acquire GlaxoSmithKline’s consumer healthcare division and the entry of activist investor Nelson Peltz onto the company’s board, Unilever suspended the sale in 2022.
With the arrival of the new CEO, Hein Schumacher, and amidst global economic uncertainty and rising capital costs in recent years, the consumer goods giant deemed it the optimal time to sell Elida Beauty.
Established in 2021, Elida Beauty’s portfolio initially included beauty and personal care brands such as Q-tips, Tigi, Caress, Timotei, Impulse, and Monsavon. In 2022, it became the official global business unit within Unilever’s personal care division, subsequently adding more brands including Alberto Balsam, Brut, Pond’s, and St. Ives. The business generated approximately €800 million in turnover in 2022.
Additionally, in October of last year, Unilever sold its brand Dollar Shave Club to the U.S. private equity firm Nexus Capital Management LP. Apart from razors, Dollar Shave Club offers a range of men’s grooming products, including recently expanded offerings such as electric trimmers.
Fabian Garcia, President of Unilever Personal Care said, “This marks another step towards the optimisation of our Personal Care portfolio. Our priority is to step up the growth of our Power Brands by investing behind key strategic focus areas such as driving unmissable brand superiority and scaling multi-year innovations. Elida Beauty’s portfolio comprises iconic and classic beauty and personal care brands. I am sure under the new ownership they will continue to prosper and serve consumers across North America and Europe.”
In October, during the company’s third-quarter earnings conference, Unilever CEO Schumacher stated that his goal is to streamline Unilever’s operations. Indeed, the sale of Elida Beauty marks Hein Schumacher’s first major action since taking over as CEO of Unilever in July last year, with his primary focus being on streamlining operations while addressing inflationary pressures.
For Unilever, the confidence in streamlining business stems from the strong performance of several major brands in its beauty business. In 2023, Unilever’s beauty business boasted five global brands with sales exceeding €1 billion each: Axe, Dove, Lux, Rexona, and Sunsilk. Other well-known brands include TRESemmé, Signal, Lifebuoy, Vaseline, and Clear. These billion-dollar brands collectively account for 53% of Unilever’s overall sales turnover.
Acquisition of K18 and Straand, focusing on core business
In addition to divesting core brands, Unilever also made three significant investments in 2023. Despite the limited number, Unilever aims to focus on its core business by acquiring established independent brands.
On December 19, 2023, Unilever invested in the Australian scalp care brand Straand through its venture capital arm, Unilever Ventures.
Straand, which was founded in July 2022, is an Australian-manufactured brand that offers hair and scalp care products. This Australian brand, which is cruelty-free, vegan, and natural, focuses on providing hair and scalp care solutions. It addresses issues such as scalp dryness, flakiness, product buildup, thinning, and hair loss by utilizing the benefits of prebiotics.
Within just over three months, Straand introduced four prebiotic scalp-balancing products, including The Crown Cleanse, The Crown Fix Serum, The Head Doctor Conditioning Treatment, and The Miracle Worker Scrub. As consumers seek more skincare-like products to improve hair health, many brands like Living Proof and The Ordinary have launched scalp care products aimed at soothing and protecting the scalp, marking a new trend in the industry.
Three days after announcing the investment in Straand on December 19th, Unilever revealed that it had signed an agreement to acquire the premium biotech hair care brand K18. Founded by Suveen Sahib and Britta Cox in 2020, K18 offers six product lines designed to identify and address the root causes of hair damage, making it a favorite among professionals and consumers alike. Its flagship molecule, K18Peptide™, mimics the structure of human keratin, capable of reversing chemical damage to all hair types within minutes, offering an alternative to complex hair care routines.
The hair care business has been a significant driver of Unilever’s steady growth performance. According to its 2023 annual report, Unilever boasts 14 brands with revenues exceeding €1 billion, including Lux, Dove, and the hair care brand Sunsilk. Both Lux and Dove also include shampoo products in their range. Other hair care brands such as Clear and Hazeline also enjoy high visibility in the hair care product segment.
The acquisition of hair care brands aligns with Unilever’s corporate strategy since the appointment of its new CEO.
During the third-quarter earnings conference call in 2023, Unilever’s newly appointed CEO Hein Schumacher stated, “First and foremost, an unrelenting initial focus on our top 30 power brands. Prioritising these 30 brands – which represent more than 70% of our turnover – gives us a real opportunity to improve Unilever’s growth profile.”
“Hence, these brands will have the first call on capital and resources. They represent our biggest value creation opportunity. Which means they need to be brilliantly executed and consistently supported before anything else. ” Hein Schumacher.
In October 2023, Unilever devised a Growth Action Plan aimed at driving performance and competitiveness. Within this growth action plan, Unilever reiterated its focus on 30 Power Brands, which collectively represent approximately 75% of the group’s turnover. Unilever stated that these brands contributed to an 8.6% increase in underlying sales for 2023, with a growth rate of 6.5% in the fourth quarter.
Furthermore, Unilever emphasized its commitment to enhancing brand investment and returns by increasing investment in areas that drive meaningful impact and bolster competitiveness.
Additionally, the company will selectively optimize its portfolio, as evidenced by the announced acquisitions of Yasso and K18, and the divestments of Elida Beauty, Dollar Shave Club, and Suave.
These investments are part of Unilever’s expansion in the hair care sector, aligning with CEO Hein Schumacher’s remarks during the earnings conference call. He emphasized the company’s focus on the 30 Power Brands, prioritizing Unilever’s capital and resources to support these brands to enhance performance growth.
