Unilever Reports Slowest Quarterly Sales Growth in Two Years

By Matthew Boyle

Unilever, the world’s second- biggest consumer-goods company, reported the slowest quarterly growth in two years as demand in Europe was held back by weaker consumer confidence and sales of ice cream and spreads faltered.

So-called underlying sales, which exclude acquisitions, disposals and currency fluctuations, rose 4.9 percent from a year earlier, the London- and Rotterdam-based maker of Dove soap said today. The average estimate of 12 analysts surveyed by Bloomberg was for a 5.5 percent gain. Units sold increased 2.2 percent, less than the 3 percent gain estimated by analysts.

Sales fell 3.1 percent in Europe, the highest rate of decline in more than three years, due to “continued difficult markets” and cold spring weather that sent ice cream sales plunging by more than 10 percent, Chief Financial Officer Jean- Marc Huet said in an interview. Europe makes up about 25 percent of the company’s revenue.

“Organic volume growth of 2.2 percent should disappoint,” Pierre Tegner, an analyst at Natixis, said in a note. “The volume decrease in Europe is a clear reminder of the low resilience ofUnilever (UNA) in Europe.”

Unilever shares dropped as much as 3.5 percent in early Amsterdam trading, the biggest intraday decline in more than a year. The stock has advanced 9.3 percent this year.

Spreads Drop

Food revenue fell 0.5 percent, hurt by a decline in its margarine business, which includes brands like Flora and Becel. Huet said the business “is taking longer than we would like” to turn around, as consumers opt for lower-priced butter.

“We can do a better job. This is self-inflicted and we need to rectify it,” he said. “It’s no quick-fix.” Unilever has been pruning its food business to focus on faster-growing beauty products. The company sold its Skippy peanut butter brand earlier this year.

Sales in developing markets such as India and Indonesia rose 10 percent in the quarter. The company has said they will account for more than 90 percent of its annual sales growth this decade.

“We remain focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow,” Chief Executive Officer Paul Polman said in the statement.

Underlying sales rose 8.3 percent in the personal-care segment, the company’s largest business, and 9.4 percent in the home-care unit during the quarter. Unilever is also seekingacquisitions, mainly of companies worth 1 billion euros to 2 billion euros. Sales in the quarter advanced 0.2 percent to 12.2 billion euros. Analysts had estimated revenue of 12.5 billion euros.

To contact the reporter on this story: Matthew Boyle in London at mboyle20@bloomberg.net

source

please give me comments thanks