Unilever feels euro chill as emerging markets help out

Unilever showed its growing reliance on the emerging markets of Asia and South America today as falling sales in the struggling eurozone saw it miss City forecasts in its first quarter.

The consumer goods giant also blamed the extremely cold weather across much of Europe for a “slow start to the ice cream season”, as sales of its Ben & Jerry’s and Wall’s brands were hit in the coldest March for more than 50 years. Unilever, which makes Hellmann’s mayonnaise and Dove shampoo, said its underlying revenue in Europe fell by 3.1% over the quarter to the end of March after consumers cut back on buying its products in these straitened times.

The London-based company said: “Southern Europe remains particularly difficult and consumer confidence in northern Europe continues to be eroded by fiscal tightening and the continuing impact of the financial crisis.” Unilever cited a “weakness” in its spreads division, such as Flora, as the group admitted it needed to step up its marketing around this category.

But a barnstorming performance in emerging markets helped to lift underlying sales by 4.9%, although this was significantly below City forecasts of 5.6% growth. This miss dragged down its shares by 52p, or 1.9%, to 2792p.

Total turnover rose by just 0.2% to €12.2 billion (£10.4 billion), following a negative currency impact of 3.5%.

The star performer was Latin America, which delivered booming revenue up 12.3%.