Unilever beats forecasts on emerging markets rebound
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Tuesday 21 January 2014
After battering global shares in consumer goods giants with a profit warning in October, Unilever, the company behind Dove soaps and Lipton iced teas, said there had been a considerable pick-up in countries like India and China.
Emerging markets have become a major factor in the company’s financial health, providing nearly 60 per cent of Unilever's sales.
So news that revenues from such regions were up 8.4 per cent in the fourth quarter of the year compared with the previous three months’ disappointing 5.9 per cent was greeted with a chunky rise in the share price, which jumped 85p, or nearly 4 per cent, to 2522p.
“The good news is that a big proportion is just good volume growth — we’re selling more products,” said chief finance officer Jean-Marc Huet.
He said the improvement in regions like Latin America and South-east Asia had been particularly marked since September.
While discretionary spending remained sluggish in the muted economic environment, soaps, shampoos and laundry sales were “heating up”, he said.
Darren Shirley, analyst at stockbroker Shore Capital, said: “We welcome this achievement, which given generally challenging market conditions, is all the more commendable to our minds.”
Chief executive Paul Polman remained cautious, however, on developed markets, which the company said “remained weak with little sign of any overall improvement”. That negativity was despite the more positive economic indicators of recent months.
Turnover for the full year came in at €49.8 billion (£41.1 billion), down 3 per cent on the previous year. The bounceback in fourth-quarter emerging markets gave an overall increase in those regions for 2013 of 8.7 per cent.
Operating profit for the year was up 8 per cent at €7.5 billion.
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