Weak overseas demand knocks Unilever sales to weakest level in almost five years
Anglo-Dutch consumer goods giant Unilever reported its weakest quarterly sales growth in nearly five years after being hit by economic woes in the eurozone and a slowdown in emerging markets.
The blue chip company, which makes Marmite, Dove toiletries and Lipton tea, saw its shares fall by 80p or more than 3 per cent to 2,454p in late morning trading.
Unilever reported a 2.1 per cent rise in underlying sales growth for the third quarter of this year, which was below City expectations for a 3.7 per cent increase
Taste test: Analyst James Edwardes Jones of RBC Capital Markets, however, described Unilever performance as ‘unimpressive’
The slowdown at Unilever, where new Tesco boss Dave Lewis was a senior executive, provides yet more evidence of the toll taken on large consumer companies by the continuing squeeze on household incomes in the wake of the financial crisis.
Sales volume rose by just 0.3 per cent in the third quarter, falling short of analysts' estimate for 1.8 per cent growth and way below the 1.9 per cent seen in the first and second quarters.
‘Macro-economic conditions continued to put pressure on consumers,’ said chief executive Paul Polman.
He added that he expects markets to remain tough for at least the rest of this year and that the company has sped up drives to cut costs and streamline the business.
Polman said growth slowed in emerging markets, particularly China, where the company generates more than half its sales. Retailers ran down their stock levels, leading to a steep decline in underlying sales.
The Eurozone crisis also had an impact as the continent saw ‘price deflation’. Polman also blamed ‘poor summer weather.’
He argued that although third quarter growth had slowed, Unilever is still ‘ahead of our markets’ and that its long-term prospects are brighter.
‘We continued to invest behind our brands and innovations so that we are well-positioned for the long term growth opportunities which remain fully intact.’
‘We are confident that we will achieve another year of profitable volume growth ahead of our markets.’
Analyst James Edwardes Jones of RBC Capital Markets, however, described Unilever performance as ‘unimpressive.’
Rivals Nestle and Reckitt Benckiser have also blamed emerging markets for weak sales growth.
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