Unilever's Aussie profits plunge
The local offshoot of Anglo-Dutch consumer products giant Unilever, which sells everything from shampoo and ice-cream to tea and laundry powder, has been hit by a profit collapse of almost 50 per cent to $43.12 million as revenues flat-lined in 2012.
The souring profit and unresponsive sales performance comes as suppliers in Australia, both big and small, are facing increasing pressure from the supermarket giants to take margin haircuts and invest heavily in their own supply systems to improve efficiencies in the supply chain.
Unilever's heavy reliance on its empire of brands is also challenged by cautious consumer behaviour and the growth in popularity of unbranded private-label groceries at the supermarket checkout.
Coles, Woolworths and new entrant, German discounter Aldi, are stripping brands from their shelves, usually only offering the top two branded items in each category to remain, and swamping the aisles with home brand products instead.
The owner of more than 1000 household consumer brands, Unilever Australia relies on selling a wide portfolio of products into the supermarket chains and other independent retailers. It has deep exposure to key consumer categories such as personal care, home care and food and drink.
Some of the company's better-known consumer brands include Lux, Vaseline, Lynx, Sunsilk shampoo, Streets ice-cream, Lipton tea, Bushells tea, Flora spreads, Jif, Omo and Drive laundry powder.
But accounts lodged with the Australian Securities and Investments Commission show it has struggled to grow its top-line sales for the 2012 calendar year with total revenue down slightly at $1.557 billion from $1.587 billion for the 12 months to December 2011.
The ASIC accounts for Unilever Australia reveal the group posted a profit for the year of $43.132 million in 2012, down by more than 40 per cent from the profit of $74.787 million recorded in 2011.
Profit before income tax was $43 million, against a pre-tax profit of $82.661 million for 2011.
A spokeswoman for Unilever said the company's profits in 2011 were inflated by asset sales.
It appears that no dividend was paid during the year to its overseas parent, similar to 2011 when it also skipped a dividend payment.
Unilever Australia, which employs just under 1600 people, did improve its asset base during the year, with assets on its accounts hitting $643 million up from $581 million.
Consumers are increasingly turning to private-label branded grocery goods, which are heavily promoted by the supermarket chains, usually cheaper and favoured by retailers such as Coles and Woolworths because they deliver fatter margins.
The supermarkets have also sought to secure branded groceries, many of which are sold by Unilever, from the grey market where they can parallel import its popular brands at cheaper prices than if bought from the local wholesaler.
Earlier this year Unilever and Woolworths were involved in a war of words over allegations that Unilever allegedly shut down attempts by the supermarket group to buy cheaper stock overseas via parallel importing.
The industry is also trapped in protracted talks to bring in a voluntary code of conduct to govern the relationship between supermarkets and suppliers such as Unilever.