Unilever dragged lower as Asian market slowdown bites

Magnum ice cream to Dove soap maker Unilever today laid bare the extent of its difficulties in emerging markets as it reported a near 7 per cent slump in global turnover over the past quarter.

Along with many consumer goods companies hit by the sudden growth slowdown in Asia and Latin America since the US Federal Reserve began debating slowing its stimulus efforts, Unilever had already braced the market last month for a bad set of numbers.

In the event, the third quarter trading statement showed turnover falling 6.5 per cent to €12.5 billion (£10.2 billion). What it called underlying sales growth, at 3.2 per cent, was the slowest quarterly pace for four years.

Meanwhile, Europe and North America continued to flatline despite economic data suggesting a recovery is well under way. Shares in the company fell sharply after last month’s profit warning, and slipped only slightly today, falling 2p to 2494p.

Chief executive Paul Polman today put a brave face on the numbers, saying that his company was still faring better than its competitors. “Emerging markets continue to be the main driver of our growth and, despite the current slowdown, they remain a significant growth opportunity which the company is well-placed to capitalise on,” he said.

Investors said there was some relief that the company had not further reduced its profit forecasts for the full year, with the general mood in the markets being that today’s numbers “could have been worse”.

Investec analyst Martin Deboo said: “Slower, slower everywhere. The story of Q3 is one of slowing geographies, slowing categories and some Macmillanite ‘little local difficulties’.”

The figures showed emerging markets growth had slowed from 10.3 per cent in June to just 5.9 per cent.

Food sales had a tricky season, with disappointingly slow sales of ice cream from the Walls owner in recession-bound southern Europe. Northern Europe was stronger, as the long, hot summer spurred sales. A global relaunch of Cornetto and continued strong sales of Magnum choc ices helped boost demand.