Ad Budgets Set to Gain as Unilever Margins Hit 14.9% in 2002

14 February 2003

Anglo-Dutch fmcg giant Unilever delighted the markets on Thursday by reporting operating profit margins for 2002 up from 13.9% to 14.9% – firmly on course to hit its self-imposed Path to Growth target of 16% by 2004.

Said chairman Niall Fitzgerald: “The momentum in our all-round performance in 2002, underpinned by strong innovation and further cost savings, gives us the confidence that our 2004 targets will be reached in full.

“We have shown the strength of our business in difficult market conditions. This has been another successful year which has seen leading brand growth sustained within the 5% to 6% range and, importantly, they now represent 89% of our business.”

A key element of Unilever’s Path to Growth programme is to reduce its brand portfolio to just 400 from the 1,600 it owned in 1999. Sales of these core brands rose 5.4% in 2002.

Just twelve of Unilever’s brands each produce sales of more than $1 billion (€0.92bn; £0.62bn) a year, among them Knorr soups, Dove and Lux soaps, Lipton tea, SlimFast, Surf washing powder, Flora margarine, and Birds Eye frozen foods.

It is not only investors who are benefiting from Unilever’s achievement; many in the ad industry are also throwing their hats in the air. The household products titan's Q4 advertising and promotion spending received a global boost of around $430 million – 3% of its quarterly sales of $14.3 billion resulting in 8.5% growth in its core brands.

According to Fitzgerald, Unilever has reinvested savings from restructuring by increasing annual ad and promotional spend to around 1% of sales, or $500 million. And annual marketing spend, he said, is on target to reach 2% of sales over the next two years.

Data sourced from: Times Online (UK) and; additional content by WARC staff