Unilever Growth Rate Is Down

Expected growth in emerging markets India, China and Latin America failed to materialise in the third quarter for Unilever. Growth of 5.1% here failed to match its second quarter growth of 7.4%.

Unilever reported net revenues of 13.3 billion euros for the quarter, 5 billion of which were in the Food & Refreshment sector. The former represented organic sales growth of 2.9% – slightly less than the predicted 3%.

In its results statement, the owner of brands including Ben & Jerry’s, Dove and Marmite confirmed that  growth in India had “softened further”; China had “slowed a little”,  and in Latin America stated that, “the economic environment remains difficult.”

CEO Alan Jupe commented: “We have maintained momentum in the quarter, with a good balance between volume and price. We will step-up competitive top line performance through innovation and portfolio evolution to serve the faster growing geographies and channels.”

India, which is Unilever’s second-biggest market after the US, saw revenue growth slow to 7% – a decline of 12% from last year. The brand however cited its efforts to develop the green tea market in India with new Lipton variants to drive share and penetration levels for the category.

Sales grew by 1.7% within Unilever’s Foods & Refreshment portfolio, with volumes down 0.2%.

Growth also remained low in Europe; as in the second quarter, Unilever attributed the decline to ice cream, which saw growth the previous year in Europe thanks to particularly good weather.

Tea saw modest growth driven by an ongoing focus on premium black tea, black tea in emerging markets and fruit and herbal variants. However, the company revealed, this growth was partially offset by subdued consumer demand for black tea in developed markets.

Herbal brand Pukka also saw decent growth, while Unilever confirmed that it had returned dressings to competitive growth.

“Hellmann’s performed well and premium brand Sir Kensington’s grew strongly, with its mayonnaise offering supplemented by a new salad dressings range,” according to the trading statement. “In savoury, Knorr continues to modernise and develop offerings that cater to demand for more natural and convenient products, including the launch of wet soups in France.”

Despite this muted quarterly growth, Unilever nevertheless predicted targets of between 3 and 5% for this year. Jupe said: “For the full year, we continue to expect underlying sales growth to be in the lower half of our multi-year 3-5% range, an improvement in underlying operating margin that keeps us on track for the 2020 target and another year of strong free cash flow.

“We are committed to delivering superior long-term financial performance and balanced, compound growth of the top and bottom line through our sustainable business model. We are taking action to remain relevant to the consumer of the future, such as setting stretching goals on plastic use which we recently announced.”

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