Unilever share price drops on weak emerging markets and food sales growth

Peter Spence
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Poor growth in food sales dragged down Unilever's second quarter performance (Source: Getty)

Challenging markets in the first half of the year have seen Unilever sales growth come in soft, despite launching a number of recent product launches.

The addition of the Ben & Jerry's Core ice cream range, and innovations in compressed deoderants and oral hygiene ranges haven't been enough to generate the sales growth analysts were expecting.

Underlying sales growth came in at just 3.8 per cent in the second quarter of 2014, well below the 4.3 per cent growth that analysts had forecast for that period.

Chief executive Paul Polman describes markets in the first half as "challenging" as Unilever has faced "significant headwinds" at the start of this year. Unilever has "experienced a further slowdown in the emerging countries whilst developed markets are not yet picking up", says Polman. The company highlighted macroeconomic pressures as weighing on consumer spending in emerging countries, particularly in Asia.

While Unilever saw underlying sales growth of 6.2 per cent in home care, and 4.5 per cent in both personal care and refreshment, its food lines delivered growth of just 0.7 per cent during the second quarter, dragging down headline progress. Unilever said that some of the underperformance in food "reflected the impact of the late Easter" while North American and European markets remained challenging for the sector.

Update: Unilever shares dropped by close to 1.8 per cent as trading began.

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