Consumer goods giant Unilever PLC yesterday said that it expects sales growth this year to be slightly below its prior expectations, blaming a slowdown in South Asia and weakness in North America.
The maker of Ben & Jerry’s ice cream and Dove soap said that despite early signs of improving performance in North America — its biggest market — a full recovery would still take time.
Developed economies have been a drag for Unilever for several quarters, where growing numbers of consumers are turning to fresher foods, niche brands or cutting back on spending.
In the company’s latest quarterly results, sales in developed markets fell 0.1 percent, in contrast to a 5.1 percent rise in emerging markets.
In India — Unilever’s second-largest market by sales — irregular monsoons have dented rural spending, while a sluggish job market has weakened consumption in urban areas.
“We are very strongly developed in South Asia, so when India takes a slowdown, we definitely feel it more than some of our competitors,” Unilever chief executive officer Alan Jope said on a conference call with reporters yesterday. “We are far from crisis conditions. It’s just a little more turbulent than we’ve previously seen.”
“Due to challenges in certain markets, we expect a slight miss to our full-year underlying sales growth delivery,” Jope added in a company statement.
The company said that it now expects underlying sales growth for this year to be slightly below its previous guidance of sales coming in at the lower half of its 3 to 5 percent forecast range.
Earnings, margin and cash are not expected to be affected, the company said in a statement.
However, the cut to the forecast undermines Jope’s earlier decision to maintain his predecessor’s outlook. It also clouds his ambition to prove that companies that emphasize social purposes can outperform rivals that do not.
“Growth remains our top priority and we are confident that we have the right strategy and investment in place to step up our performance,” Jope said in a statement.
Unilever shares yesterday morning fell as much as 5 percent in Amsterdam, the steepest decline in two years.
The new outlook implies fourth-quarter growth are to be the weakest in more than a decade, RBC Europe Ltd analysts said.
Additional reporting by Bloomberg
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