Unilever Sri Lanka pursues growth despite difficult times

Unilever Sri Lanka, despite the uncertainties, is expressing optimism about long term prospects in Sri Lanka where it currently invests over Rs. 300 million per annum in capital expenditure for their production facilities.

Commenting on the company’s first half 2007 performance, Amal Cabraal, Chairman of Unilever Sri Lanka said that despite the challenging economic environment, Unilever Sri Lanka remains on track in pursuing its vision to double its business over the next five years and will continue to invest in “its brands, its people and its manufacturing facilities.”

The company reported a 11.4% turnover growth in first half 2007 over the same period last year. Domestic business which accounts for 76% of the overall business grew 13.9%, with market share gains in most key categories such as Fabric Cleaning, Skin Cleansing, Skin Care, Margarines, Oral and Hair Care.

Despite satisfactory top-line growth, the steep escalation in the price of palm oil, the principle raw material used in the manufacture of soap, together with other inflationary pressures have taken a toll on the company’s profitability, the statement said. Even though palm oil prices increased by 30% in the first half of the year, prices of soaps were increased only by 5% as Unilever has refrained from passing on the full effect of the cost increases to the consumer. The resulting impact on profitability has to some extent been mitigated through aggressive cost effectiveness projects. However, with palm oil prices projected to rise a further 37% in the second half of the year and with the rupee too expected to devalue, the company said that it will be hard pressed not to pass on more of the cost escalations to consumers.