Unilever Q4 sales miss expectations

Roman Schwartz
February 3, 2019

Less than a month into his role as chief executive of Unilever, Alan Jope has warned that sales this year could be hit by higher commodity costs, currency fluctuations and challenging markets.

Unilever plc (LON:ULVR) shares dropped as the consumer goods giant reported fourth quarter sales that missed expectations and said it anticipates challenging market conditions to persist this year.

In terms of the group's individual divisions, its Beauty & Personal Care arm saw sales rise 3.1%, driven by a 2.5% volume gain, with its biggest brand, Dove, seeing "another year of broad-based growth". The company, which a year ago scrapped plans to abandon its London headquarters, further warned that market conditions were likely to remain challenging.

He added: "For us to move up into the top half of our guidance range we would need to see a sustained recovery in Latin America and the continuation of the progress we are seeing in south-east Asia".

Unilever has hired extra warehouses to stockpile Magnum ice creams and deodorants on both sides of the Channel amid growing fears a no-deal Brexit will disrupt the Anglo-Dutch company's supply chain. The target calls for an operating margin of 20 percent.

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The Unilever chief executive said that the company had only stockpiled two weeks' worth of goods and raw materials because "one of the things we have learned is, when you".

"There's nothing new about the intention, but so far at least the reality has failed to live up to it", said analysts at RBC Capital Markets, referring to Jope's stated focus on accelerating growth. It was the same in Europe, but the group's sales rose 0.8 percent in the region.

Unilever said modest sales growth in its developed markets was helped by "a standout year for ice cream in Europe", where warm weather and new products helped sales.

Unilever posted a 5.1% decline in turnover to 50.98 billion euro (£44.65 billion), which the company blamed on foreign exchange headwinds of 6.7% and the disposal of the spreads business, which was completed last July.

Its full-year earnings were 3.48 euros per share.

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