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Unilever flags up coronavirus threat and warns on annual sales
30th Jan 2020 07:37
(Sharecast News) - Unilever flagged up the threat from the coronavirus to its business as the consumer goods company warned annual sales growth would be at the low end of its target range.
The maker of Dove soap and Ben and Jerry's ice cream reported underlying operating profit for the year to the end of December up 5% to €9.95bn (£8.43bn) from a year earlier. Underlying sales rose 2.9% as turnover increased 2% to €52bn.
Underlying sales growth was below Unilever's 3-5% target range in 2019 because of a slowdown in the fourth quarter. The FTSE 100 company said sales growth in 2020 would be at the low end of the range and that growth would miss its target in the first half.
Alan Jope, chief executive, said: "In 2020, our underlying sales growth is expected to be in the lower half of the multi-year 3-5% range and will be second-half weighted. While we expect an improvement from the fourth quarter of 2019 into the first half of 2020, first half underlying sales growth will be below 3%.
"The impact of the coronavirus outbreak is unknown at this time. As we near the completion of our three-year strategic plan, we expect continued improvement in underlying operating margin and another year of strong free cash flow, remaining on track for our 2020 goals."
The Anglo-Dutch company said there was a sharp slowdown in South Asia in 2019 with some market softening in China. Brazil showed signs of improvement in a volatile Latin American market while South East Asia grew well and Europe struggled.
China was slowing before the outbreak of the coronavirus epidemic, which has killed more than 100 people in China and raised fears about its impact on China's economy and beyond. British Airways and other airlines have suspended flights to and from China and the UK is flying about 300 citizens home from Wuhan to be placed in quarantine for a fortnight.
Unilever is weighing up which of its wide range of products it wants to keep after repelling a bid from Kraft-Heinz in 2017 and in light of the climate emergency. The company said it had launched a strategic review of its global tea division, which includes PG Tips.
The maker of Dove soap and Ben and Jerry's ice cream reported underlying operating profit for the year to the end of December up 5% to €9.95bn (£8.43bn) from a year earlier. Underlying sales rose 2.9% as turnover increased 2% to €52bn.
Underlying sales growth was below Unilever's 3-5% target range in 2019 because of a slowdown in the fourth quarter. The FTSE 100 company said sales growth in 2020 would be at the low end of the range and that growth would miss its target in the first half.
Alan Jope, chief executive, said: "In 2020, our underlying sales growth is expected to be in the lower half of the multi-year 3-5% range and will be second-half weighted. While we expect an improvement from the fourth quarter of 2019 into the first half of 2020, first half underlying sales growth will be below 3%.
"The impact of the coronavirus outbreak is unknown at this time. As we near the completion of our three-year strategic plan, we expect continued improvement in underlying operating margin and another year of strong free cash flow, remaining on track for our 2020 goals."
The Anglo-Dutch company said there was a sharp slowdown in South Asia in 2019 with some market softening in China. Brazil showed signs of improvement in a volatile Latin American market while South East Asia grew well and Europe struggled.
China was slowing before the outbreak of the coronavirus epidemic, which has killed more than 100 people in China and raised fears about its impact on China's economy and beyond. British Airways and other airlines have suspended flights to and from China and the UK is flying about 300 citizens home from Wuhan to be placed in quarantine for a fortnight.
Unilever is weighing up which of its wide range of products it wants to keep after repelling a bid from Kraft-Heinz in 2017 and in light of the climate emergency. The company said it had launched a strategic review of its global tea division, which includes PG Tips.