Unilever Sales Growth Slips to Four-Year Low as Demand EbbsMatthew Boyle
Unilever, the world’s second-biggest consumer-products maker, reported the slowest quarterly sales growth in four years as demand for its soaps and spreads declined around the globe.
So-called underlying sales rose 3.2 percent in the third quarter compared with a year earlier, the British-Dutch maker of Clear shampoo said today in a statement. That compares with 5 percent growth in the first half, while the median estimate of 14 analysts surveyed by Bloomberg was for a 3.3 percent gain.
The Magnum ice-cream maker said sales growth will accelerate in the fourth quarter, driven by innovation. Demand has slowed in emerging markets, where the company generates more than half of its revenue, and failed to pick up in North America and Europe amid higher levels of competition.
“We are not planning on any improvement in market growth -- things remain volatile,” Chief Financial Officer Jean-Marc Huet said by phone. “Emerging-market countries have slowed to 6 percent to 7 percent growth and that is good planning for the quarters to come. We want to do better than those rates.”
Unilever shares fell 0.6 percent to 28.78 euros at 9:10 a.m. in Amsterdam, leaving them little changed this year. Nestle SA stock rose 0.3 percent to 65.40 Swiss francs in Zurich, while yogurt maker Danone gained 0.5 percent to 54.82 euros.
Unilever said last month that sales growth in the quarter would be 3 percent to 3.5 percent, hurt by weak currencies in developing countries, which account for 57 percent of revenue. Polman is also faced with worsening consumer confidence in the U.S., its single largest market.
The company, which sold its Wish-Bone salad dressing business, also withdrew from less profitable ice-cream products in North America and continued to struggle with its spreads division, limiting underlying sales growth in the Americas region to 1.8 percent.
In Europe, Unilever sold more products overall as it cut prices and as warmer weather buoyed demand for frozen treats in the north of the region, bringing underlying sales growth to 0.4 percent.
“The absence of mature market growth is a salient feature relative to a number of its peers,” Oriel Securities analyst Chris Wickham said in a note to clients.
Revenue growth in emerging markets slowed to 5.9 percent compared with 12 percent in the same period last year. It’s the first time since the end of 2010 that sales in developing markets like India and Indonesia increased less than 10 percent.
Unilever’s emerging-market difficulties contrast with the brighter picture painted by Nestle and Reckitt Benckiser Group Plc. Nestle’s emerging-market revenue rose 8.8 percent in the first nine months of the year, speeding up from the first-half’s 8.2 percent pace. Reckitt Benckiser, the maker of Durex condoms, said this week that sales in Latin America and Asia grew 10 percent in the third quarter. Both companies derive more than 40 percent of their revenue from developing regions.
“The market is understandably a little skeptical that the slowdown is purely a function of market growth and does not reflect some Unilever-specific issues, given peers generally seem to have been less impacted,” said Exane BNP Paribas analyst Jeff Stent.
Units sold rose 1.9 percent in the quarter, Unilever said, topping the 1.7 percent gain estimated by analysts. Underlying sales exclude acquisitions, disposals and currency fluctuations.
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