Adds $430 Million to Global Marketing Budget

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CINCINNATI (AdAge.com) -- Unilever boosted fourth-quarter advertising and promotion spending by around $430 million globally -- or 3% of its quarterly sales of $14.3 billion -- and had strong 8.5% growth in its so-called leading brands to show for it.

Unilever's five-year Path to Growth restructuring plan, now entering its fourth year, remains on track, said Co-Chairman Niall FitzGerald in a meeting with analysts in London, as the company has met its sales growth goals for leading brands two years ahead of schedule.

2% increase planned
Unilever has used savings from

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restructuring to so far increase annual ad and promotion spending by about 1% of sales, or $500 million. The company is on track to deliver the other half of the promised 2%-of-sales bump in annual marketing spending from the five-year plan's savings over the next two years, Mr. FitzGerald said.

The fourth-quarter increase in marketing spending accounted for the bulk of Unilever's $625 million increase for the full year. About 80% of the fourth-quarter marketing increase came in advertising, with the rest in promotion, said Howard Green, senior vice president of investor relations. Much of the increase came behind launches in the U.S. of Axe men's deodorant sprays and increased support behind the broader Dove megabrand in preparation for this year's launch of Dove hair care.

400 leading brands
Unilever's earnings edged up 22% to $314 million in the quarter. Sales edged up a modest 1.6%, but excluding divestitures rose 7.2%, Unilever said. Sales of Unilever's "400 leading brands," which the company plans to keep and support with advertising and which account for 89% of overall sales, rose 8.5% to $12.7 billion. (Unilever currently has about 800 brands globally, down from 1,600 three years ago, and plans to ultimately cut the number to around 400 through divestitures, discontinuations or merging brands.)

Results in North America, however, were considerably less robust, with sales down 5% for the quarter. Divestitures of the Mazola oil and DiverseyLever commercial cleaning chemicals business erased what otherwise would have been low single-digit gains.

Sales flat in North America
For the full year, Unilever's North American sales were flat in home and personal care, as declining sales of laundry detergents erased gains from Dove and Axe. Food sales rose 2%, with Unilever's exit from the Hellman's salad dressing business, price competition in mayonnaise and falling butter prices offsetting gains in the Lipton and Knorr brands and in ice cream. Unilever said sales growth in North America improved as the year closed, but did not provide details.

Unilever projects earnings per share, excluding unusual items, will increase by low double digits, while sales of the leading brands will grow 5% to 6% in 2003.

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