Unilever growth curbed by slowdown in emerging markets - UPDATE

24th Jul 2014 07:30

Unilever reported a lower-than-expected increase in second-quarter sales on Thursday, blaming a deterioration in emerging markets and flat developed markets.The Anglo-Dutch consumer goods company, whose brands include Dove soap, Ben & Jerry's ice cream and Lipton tea, said underlying sales, which exclude foreign exchange, acquisitions and disposals, rose 3.8% in the quarter, compared to a 3.6% increase in the first quarter.Analysts were expecting underlying sales growth of 4.3% for the second quarter, according to figures given by Unilever.European sales fell 0.8% in the second quarter and Foods continued to struggle, with sales up 0.7% in the quarter despite a favourable Easter phasing impact. North American sales rose 0.4% in the second quarter, having been down in the first.Turnover decreased by 5.5% to €24.1bn (£19.2bn) and core earnings per share (EPS) were up 2% at €0.78.Broker Canaccord said that EPS was ahead of a consensus of €0.74, but the numbers were notable for a further weakening in volumes against expectations. Volumes were up 1.9% versus a consensus forecast of 2.4%.Paul Polman, Chief Executive Officer, at Unilever, said: "We remain focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow." Canaccord said the recent disposals of Slim-Fast and the Bertolli and Ragu sauce businesses were "an acknowledgement that the North American and Food portfolios needed radical action, albeit we do not expect further disposals". Analysts view Polman's tone as "downbeat", with his view that the market environment is "as tough as at any time in the last five years and probably a long time before that too" with market growth now "below 2.5%" and emerging market growth at just 5%.Shares in Unilever were virtually flat at 2,684p by 11:00 on Thursday. NH/OH