Outlook grim for Unilever as markets slow
CONSUMER goods group Unilever said 2012 will be a difficult year as growth in emerging markets, which accounts for more than half its business, slows and demand in Europe and North America stays flat at best.
The gloomy outlook sent shares in the Anglo-Dutch group sharply lower yesterday after it broadly matched 2011 sales growth and profit margin forecasts.
Unilever, which pushed up the prices of brands such as Dove, Hellmann’s, and Knorr to offset higher commodity costs, said growth in emerging markets had now slowed due to these price rises and weak consumer confidence.
Finance director Jean-Marc Huet said growth in emerging markets such as Africa, Asia and Latin America stayed strong but the company needed to do better in Russia and eastern Europe, where its performance was sluggish.
The world’s third-biggest consumer goods group said underlying sales in 2011 rose 6.5 per cent in line with forecasts of 6.4 per cent, with annual growth of 6.6 per cent compared to rival Procter & Gamble which saw a four per cent rise.
Its fourth quarter underlying sales rose 6.6 per cent, just missing forecasts of 6.8 per cent, but the rise was made up of 6.5 per cent from price and just 0.1 per cent from volume gains.
Emerging markets, which make up 54 per cent of Unilever’s business, grew 11.5 per cent in 2011. In product terms, its personal care goods like Lux and Sunsilk were the fastest growing at 10 per cent while its foods grew just over three per cent.
Overall annual turnover rose five per cent to €46.5bn, and it paid a quarterly dividend of 22.5 cents a share compared to 20.8 cents the same time in the previous year.