Unilever unfazed by increase in input costs

Our Bureau Mumbai | Updated on March 15, 2011 Published on March 08, 2011

Mr Paul Polman

The current increase in input costs will not affect Unilever's performance as the FMCG major is equipped to manage the short-term fluctuations, reiterated its global CEO, Mr Paul Polman.

Mr Polman, who is currently on a visit to India, which accounts for nearly 8 per cent of the company's global turnover, said, “We had faced these challenges in 2008, and yet, we did well in 2009 and 2010. Now, we see these fluctuations coming in again.”

At a media interaction here on Tuesday, he said, “What we must do is separate the short term, which is the coming six months, from the long term. We have some input cost inflation, which I think is manageable. Despite what we see now, it is not as bad as what we saw in 2008, when oil price went to $150-160 per barrel. Now, it's at $110 or 120. For the long term, our strategy is solid.”

“More importantly, we are better prepared to find savings in this company. In 2009, we found €1.5 billion in savings and in 2010, we had €1.4 billion,” said Mr Polman. The company has set a target of €1 billion in savings for this year.

“Our organisation is better structured now to capture efficiencies globally, regionally, or locally,” added Mr Polman.

The CEO also said that Unilever brands could bear an increase in pricing, if the inputs cost had to be passed on to the consumer. The company spent an incremental €400 million in 2009 and €300 million in 2010 globally on advertising and promotion.

Unilever's Indian subsidiary, HUL, reported a marginal drop (1.7 per cent) in net profit due to high input costs, for the quarter ended December 31, 2010.

Buoyed by its performance over the last two years, the consumer products company is looking to double its turnover across markets “in a very short time.”

To achieve its targeted growth, the company will rely on growing its existing brands organically and taking brands across markets.

“Introducing new brands is not an easy process. The first opportunity for growth will be through market development with existing brands. The next option will come from taking brands from the portfolio across markets; 80 to 90 per cent of our targeted growth will come from this route, and the rest from acquisitions,” explained Mr Polman.

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Published on March 08, 2011
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