Unilever has turned to new products including “avocado mayonnaise” in an effort to revive sales in its food division, which is set to be spun off in a £33bn deal.

The consumer goods group upgraded its sales expectations, but the performance of its food business and European operations weighed on operating profit, which rose 2.6 per cent to €4.9bn in the first half of the year.

In March, the FTSE 100 company announced a £33bn agreement to sell its food business, which includes brands such as Marmite and Hellmann’s, to US food group McCormick. The move is part of Unilever’s wider effort to streamline its portfolio and focus on faster-growing areas, even as it works through the near-term impact on group profit.

The spin-off, which drew some opposition from investors, has started to take shape, and McCormick said earlier this month that it will establish a secondary listing in London.

Unilever said its food arm is also affecting the performance of its beauty and personal care portfolio, which includes Persil, Lynx and Dove.

Turnover in the food business fell 4 per cent to €6.3bn, while sales of personal care products increased 4.2 per cent to €6.8bn.

Unilever leans on avocado mayonnaise

The company said it is relying on new products such as avocado mayonnaise to support sales in the US, where it is facing “a softer market environment and increased competition” in the condiments market.

“Foods growth is expected to accelerate in the second half of the year, led by innovation and improved developed market performance,” Unilever said.

The group said gross margin in its food division was hit by rising commodity cost inflation and higher investment in its products.

Unilever’s weakest performance in the first half came in Europe, where sales fell 0.9 per cent. That compared with growth of 7.6 per cent in Latin America and 8 per cent in India.

Sales growth in France, Italy and the Netherlands was “more than offset” by weaker performance in Germany and Eastern Europe, the company said.

By contrast, the FTSE 100 group recorded almost 5 per cent growth in its personal care arm, which accounts for more than a quarter of group turnover.

Dove, the company’s largest brand and part of its skin care range, posted high-single-digit growth, while investment in World Cup advertising campaigns helped performance in the second quarter, it said.

‘Clear direction of travel’

Fernando Fernandez, Unilever’s chief executive, said the company’s work to “transform” its portfolio has meant that its “brands are stronger [and] our execution is sharper”.

“The macroeconomic environment remains uncertain, but our consistency, discipline and strong first half performance give us confidence that we are well positioned to deliver our upgraded full year outlook,” he added.

The group said it now expects to remain within its multi-year guidance for 4 to 6 per cent sales growth, having previously guided toward the bottom end of that range.

Unilever also said it expects to deliver 3 per cent underlying volume growth, up from its previous forecast of 2 per cent. The higher target suggests management is leaning more heavily on selling more products rather than relying on price increases alone, a notable point for a consumer goods group operating in uneven markets across regions and categories.

Alex Pugh, an analyst at Freetrade, said: “Unilever’s first half gives CEO Fernando Fernández something to shout about.

“The conglomerate still has work to do, but there’s a clear direction of travel. For a consumer goods giant, that is exactly the sort of progress investors wanted to see.”

Shares in Unilever rose 7.7 per cent on Tuesday to 4,984p.