Bottom Line: This is just the start of the dreaded slowdown

Elizabeth Fournier

IT DOESN’T seem to matter what Unilever is selling. From Dove deodorant to PG Tips and Pot Noodles, the group’s emerging markets customers aren’t buying.

Except that’s not strictly true. Monday’s profits warning from the consumer goods group didn’t say that sales are set to have fallen in the third quarter, just that growth will have slowed – from five to between three and 3.5 per cent.

At the moment it doesn’t look too bad, but the fact that CEOs are willing to admit that the emerging markets cash cow might be drying up is enough to scare investors.

For years loose monetary policies in the west have propped up markets in countries such as India and Brazil, helping boost domestic markets and leaving consumers with more money to spend.

It has kept firms such as Unilever – as well as Reckitt Benckiser, brewer SABMiller and power supplier Aggreko – with a steady flow of income as more traditional markets dried up.

But now the tide is turning. The end of easy money has got investors running scared, disposable incomes are squeezed, and companies back home are starting to feel the effects.

A three cent share drop might not sound like much, but when you have a market cap of almost £70bn – like Unilever – it means more than £2bn wiped off market value.

Unfortunately for investors, there could be a lot more to come.