Unilever Reports Slow Sales Growth in Q3
24 Oct 2014 --- Unilever has released a trading statement for the third quarter of 2014. Underlying volume growth was 0.3% and pricing up 1.8%, while turnover declined 2.0% to €12.2 billion including a negative currency impact of 2.6%. Acquisitions & disposals reduced turnover by 1.5%.
Commenting on the results Unilever CEO Paul Polman says: “We continued to invest behind our brands and innovations so that we are well-positioned for the long term growth opportunities which remain fully intact. We expect markets to remain tough for at least the remainder of the year. We have further accelerated our initiatives to remove unnecessary cost, simplify the business and ensure that Unilever is both agile and resilient.”
“We are confident that we will achieve another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow."
Market growth continued to slow in the third quarter as macro-economic pressures affected consumer demand. Emerging market growth remained weak with flat volumes. Within this there was a sharp slow-down in China. We are now seeing early signs of improvement in North America as the impact of the economic recovery starts to be felt by consumers. Europe declined in both volume and price with the impact of the poor summer weather on the ice cream category.
Against this background Unilever continued to grow ahead of our markets, both in volume and value. Underlying sales growth in emerging markets slowed to 5.6% whilst developed markets declined in the quarter by 2.5%. We saw good performances from Home Care and Personal Care but Foods continued to decline due to spreads.
In China the impact of the sharp market slow-down has led to trade de-stocking across the distribution channels. This resulted in a decline in our underlying sales of around 20%.
In Foods the company saw growth in savoury and dressings but this was insufficient to offset the continued decline in spreads.
Knorr delivered a strong programme of innovation with the launch of stock cubes fortified with vitamins in South East Asia and a new range in Argentina designed for locally relevant dishes. We launched a new range of Knorr mealmakers in Thailand and introduced a new range of ready-to-heat soups made with natural ingredients and sustainably-sourced vegetables in Germany. Dressings continued to grow despite slowing markets helped by the successful launch of Hellmann’s in the Netherlands and the re-launch of Calve in Italy.
Spreads faced strong headwinds from the decline of the margarine market and price deflation in a weak commodity costs environment. We gained significant market share in margarine but this was not sufficient to offset the overall decline of the category. We continued to launch products with a blend of vegetable oils and butter such as Gold from Flora with more than 10 product introductions completed in Europe in less than twelve months.
After a strong start to the year, ice cream was held back by poorer European summer weather. Despite the headwinds, innovations such as Breyer’s Gelato, Ben & Jerry’s Cores, the Cornetto re-launch, Magnum’s 25th anniversary together with strong execution in key markets like Turkey enabled the category to deliver positive growth.
In tea, Lipton grew in the United States helped by the success of K-Cups and the liquid concentrate innovation. New Lipton Earl Grey with a ‘freshly picked’ taste has been launched in Europe and PG Tips fruit and green teas are off to a good start in the United Kingdom.
