Friday, 22 February, 2019


Unilever's fourth quarter sales miss expectations

Ben and Jerry's Ben and Jerry's brand ice cream sits in a supermarket freezer in Princeton Illinois U.S. on Wednesday
Conrad Doyle | 02 February, 2019, 18:26

Then-chief executive Paul Polman stepped down in the wake of the row and was replaced by Alan Jope.

Mr Polman stood down at the end of December after a decade at the group where he oversaw the failed plan to move Unilever's headquarters from London to Rotterdam and fended off a takeover bid from rival Kraft Heinz.

"With growth weak but H2 margins strong, we expect this to fuel the ongoing debate on Unilever's top line versus bottom line", Jefferies analysts said.

"In 2019 we expect market conditions to remain challenging", he said, adding that sales growth will likely be in the lower half of its multiyear target of between three and five percent. Noting problems in Argentina and Brazil, he called Latin America the most troubled part of the world.

"Looking forward, accelerating growth will be our number one priority".

Nonetheless, he expected to see continued improvement in the company's underlying operating margin and another year of strong free cash flow and said Unilever was "on track" to meet its 2020 goals.

Unilever's underlying operating margin increased 90 basis points to 18.4% thanks to product innovations and cost savings, while underlying earnings per share (EPS) still rose 5.2% to €2.36 albeit with a boost from buybacks.

Its full-year earnings were 3.48 euros per share.

In the fourth quarter, Unilever blamed Argentina, which makes up 2.5 percent of its overall business, for hyperinflation that led prices to spike more than 50 percent and therefore volume to fall more than 20 percent in the quarter.

Underlying sales grew by 2.9% in 2018 from the year earlier and, excluding the spreads business, by 3.1%. The stock is underperforming the broader United Kingdom market, with the benchmark FTSE 100 index now standing 0.52 percent higher at 6,977.51 points.

The company blamed declines in France and competitive pressures in North America, particular in ice cream and mayonnaise. Meanwhile, the company reported turnover of €49.6 billion ($57.05bn) - down 5.1 per cent year-on-year due to an adverse currency impact of 6.7 per cent and the disposal of its spreads business to KKR in a deal completed in July last year.

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