Analysts react to Unilever's drop in revenues

Helen Cahill
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The company has disappointed investors this morning (Source: Getty)

Unilever's shares are set for their worst day of trading in the last five years, having fallen four per cent this morning.

Investors are reacting to the food manufacturing giant's fourth-quarter and final year results, which missed expectations. Revenue fell one per cent for 2016, and Unilever also warned that it would be facing "tough market conditions" throughout this year. Its share price was down 4.54 per cent at time of writing.

Darren Shirley, analyst at Shore Capital, said the results were a "mixed bag". Sales deteriorated, but profits were ahead of expectations due to Unilever's focus on margins.

Read more: Unilever braced for tough market conditions to continue in 2017

"Unilever is not immune from the challenging conditions across most markets, though this is further evidence that in areas where Unilever has more control (i.e. gross margins and costs) it continues to surprise," he said.

Andrew Wood, senior research analyst at Bernstein, said that although Unilever achieved "reasonable" organic growth and a "solid operating performance in tough markets" in the fourth quarter, the results meant Bernstein's top-line growth expectations for the year ahead were too high.

He added:

We would expect a negative stock reaction to today's reporting, especially given the top-line weakness and the cautious guidance for early 2017.

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