Unilever has reported underlying sales growth excluding spreads of 3.5% for 2017, with growth in all its categories. Turnover increased by 1.9% to €53.7 billion, which included an adverse currency impact of 2.1% and 0.9% from acquisitions net of disposals. The step-up in volume growth in the fourth quarter to 3.2%, with 4.2% from emerging markets, included benefits from the company's strengthened innovation plan, and was supported by increased re-investment of savings, as well as a softer prior year comparator. The gross margin improved by 40bps to 43.1%, primarily driven by both positive mix and the roll-out of the 5-S savings programme that more than offset commodity cost headwinds. The absolute level of brand and marketing investment was flat in local currencies versus the prior year, as savings in advertising production were re-invested in increased media spend, particularly in the second half of the year. As a percentage of turnover, brand and marketing investment was down 60bps. Overheads reduced by 10bps, driven by a further reduction in the underlying cost base partially offset by investment in capabilities including new business models and e-commerce. As a result, the underlying operating margin improved by 110bps to 17.5%. The operating margin was 16.5%, up 170bps. In Asia, underlying sales increased by 5.9%, with accelerated volume gains in the second half of the year and good performances for ice cream, cooking products and fabric conditioners. In North America, market growth was weak throughout the year, particularly in traditional sales channels. This resulted in flat underlying sales for the year despite competitive performances across most categories. Markets in Europe remained challenging with subdued volume growth and continued price deflation in several countries, which led to a modest sales decline. Central and Eastern Europe continued to perform well, the UK returned to growth but weak consumer demand and a challenging retail environment affected performances in France and Germany. Underlying earnings per share increased by 10.7% to €2.24, after a negative currency impact of 0.3%. Constant underlying earnings per share increased by 11.0% primarily driven by underlying sales growth and improved underlying operating margin. Paul Polman, chief executive officer, said: "We have delivered a good all-round performance with competitive growth, including an innovation-led improvement in volumes in the fourth quarter, and substantially increased margin, earnings and cash flow. This puts us well on track to deliver towards the strategic objectives set out for 2020 and demonstrates the progress we have made in transforming Unilever into a more resilient and more agile business. "2017 has once more been a year of major change for Unilever with the acceleration of the 'Connected 4 Growth' programme, that we announced in 2016. With the implementation of a more agile, consumer-facing organisation, we are seeing quality and speed of innovation further improve. At the same time, we have significantly stepped up the delivery from our savings programmes and continued the evolution of our portfolio with 11 acquisitions announced and completed in the year as well as the announcement of the disposal of the spreads business. All of this is making Unilever increasingly competitive in light of fast-changing consumer and technology trends. "Our priorities for 2018 are to grow volumes ahead of our markets, maintain strong delivery from our savings programmes and to complete the integration of Foods & Refreshment as well as the exit from spreads. We expect this will translate into another year of underlying sales growth in the 3% - 5% range, and an improvement in underlying operating margin and cash flow, that keeps us on track for the 2020 targets."
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