Unilever sees sales slow but insists form is temporary

23-Oct-2013 - Last updated on 24-Oct-2013 at 08:52 GMT

Unilever are Sure that sales will pick up again

Anglo-Dutch consumer goods firm Unilever has seen its sales growth slow due to currency weakness in emerging markets, but insists that this is only a temporary issue and that things will pick up again.

Demand for the company’s soaps declined around the world, although it appears to be the Food sector that took the bigger hit compared to the Personal Care business.

Underlying sales rose 3.2% in the third quarter compared with 5% growth in the first half; and this was also below analysts’ estimates of 3.3% growth.

However, the Dove soaps maker did warn that this would happen earlier in the year, and insists that sales growth will accelerate in the fourth quarter, driven by innovation.

Demand has slowed in emerging markets, where the company generates more than half of its revenue, and failed to pick up in North America and Europe amid higher levels of competition and worsening consumer confidence.

Revenue growth in emerging markets slowed to 5.9% compared with 12% last year, and it is the first time since the end of 2010 that sales in developing markets like India and Indonesia increased less than 10%.

Slowdown

“Emerging markets continue to be the main driver of our growth and, despite the current slow-down, they remain a significant growth opportunity which the company is well-placed to capitalise on,” comments company CEO Paul Polman. “We have not yet seen an improvement in market conditions in North America or Europe.”

“We expect to report a sequential quarterly improvement in underlying sales growth in the fourth quarter driven by a strong innovation pipeline.”

The Unilever chief says the company remains focused on achieving another year of profitable volume growth ahead of its markets, steady and sustainable core operating margin improvement, and strong cash flow.

Personal Care performance

The Personal Care category continued to deliver healthy volume-led growth in the quarter and remains competitive despite slowdown elsewhere.

Hair performed well thanks to the strength of the Dove and TRESemmé brands, whilst Toni&Guy was also launched into new markets continues such as the United States retail channel.

Skin cleansing growth was driven by strong performances, again by Dove, and also from Lifebuoy; which saw notable strength in South Africa and in India.

In skin care, Vaseline body lotion sprays continued their success in North America and are now being extended to the United Kingdom and the Netherlands. The male face launch of Dove Men+Care also continued to drive growth.

Deodorants growth reflected another strong performance by Dove in both the male and female ranges.