Emerging markets prop up Unilever’s modest growth
Unilever has announced steady progress in its third quarter results, despite slower markets. (Release)
During the quarter, underlying sales grew 3.2 per cent, with emerging markets up 5.9 per cent. Chief executive officer Paul Polman commented that emerging markets continue to be the company's main growth driver, despite the current slowdown. He said that the company is "well-placed to capitalise" on these growth opportunities, adding that it has not "seen an improvement in market conditions in North America or Europe."
Underlying volume growth was up 1.9 per cent and pricing 1.3 per cent. Turnover, however, decreased 6.5 per cent to €12.5bn (£10.64bn) as the products giant continued to feel to effects of macro-economic headwinds.
In Europe, volume growth was seen, despite fundamentally weak markets. Growth was offset by lower pricing, so underlying sales saw a marginal increase. Strong ice cream sales in Northern Europe were contrasted by a diminished season in southern countries.
Growth in North American declined overall for the company after the withdrawal of low margin ice cream and ongoing weakness in spreads. Latin America growth remains strong, as did Australia, where the company has reached an agreement to acquire the T2 tea business. Japan picked up but underlying sales across Asia slowed in the quarter.
In the food department, spread continues to diminish performance. To combat this, Unilever re-launched Flora in the UK with a new advertising campaign, along with "Simply Delicious" versions of Country Crock and I can't Believe It's Not Butter in the US, with no artificial colours or preservatives.
Dove and TRESemme are both doing well in new markets, along with Sunsilk. Toni&Guy was launched into new markets, for example, US retail, where vaseline's body lotion continues to do well.
The roll-out of squeeze Hellmann's in Brazil helped dressings growth, along with Knorr cooking products, particularly jelly bouillon.
The slimming-down of Unilever's non-core portfolio accounted for one per cent of reduced turnover. Unipro bakery and industrial oils business in Turkey was disposed of in the third quarter, along with American Wish-bone and Western brands at the beginning of the fourth.
Over the nine months to the end of the period, underlying sales growth for the global consumer goods company was up 4.4 per cent – 8.8 per cent in emerging markets. Underlying volume growth was 2.4 per cent ahead of the company's markets and pricing was up 1.9 per cent. Turnover decreased 2.0 per cent to €38.0bn (£32.35bn).
The statement pointed out that Unilever continues to be involved in a number of competition investigations, but says its too early to determine an outcome or impact.