Unilever has warned this morning that it will miss sales growth expectations this year due to challenging trading environments in some of its largest markets.
The consumer goods giant’s share price fell more than five per cent after it said full-year underlying sales growth is expected to be below three per cent, and warned that the slump will continue into 2020.
The conglomorate had previously forecast underlying sales growth of between three and five per cent.
Neil Wilson, chief market analyst at Markets.com, said: “Weaker sales growth is a problem, but lately we have been encouraged that earnings growth is being driven by price rather than volume.
“However, the problem for fast-moving consumer goods giants with the big brand names is that consumers have a lot more choice and are more discerning than ever.”
“If Unilever were performing as in days gone by, investors would be attracted to the defensiveness of it is consumer products when global conditions are more iffy,” Jasper Lawler, head of research at London Capital Group, added.
“Instead, there is a feeling that Unilever has not convinced its consumers about its green credentials. In our view, mass-produced, over-priced branded products wrapped in plastic is not where consumer demand is headed.”
Unilever blamed slowing sales growth on an economic slowdown in South Asia – one of its largest markets – and difficult trading conditions in West Africa.
The company said trading in North America is showing early signs of improvement but warned that a full recovery will take time.
Earnings, margin and cash are not expected to be impacted, the company said in a statement.
Chief executive officer Alan Jope said: “Due to challenges in certain markets, we expect a slight miss to our full year underlying sales growth delivery.
“Looking ahead to 2020, growth will be second-half weighted. While we expected improvement in the first half of 2020 versus this quarter, we expect that first half growth will be below 3 per cent.
“Our full year underlying sales growth is expected to be in the lower half of the multi-year range.
“Growth remains our top priority and we are confident we have the right strategy and investment in place to step up our performance.”