By Simon Zekaria
LONDON--Unilever PLC (UN) Thursday said slowing North America
sales growth and a tepid start to ice cream purchases amid
unusually cold weather in Europe saw its revenue growth slacken
more than expected.
The 83-year-old Anglo-Dutch consumer goods company, which is the
second-largest maker of branded household products by revenue after
U.S.-based Procter & Gamble Co. (PG), said first-quarter sales
excluding acquisitions, disposals and currency movements rose 4.9%.
This compares with 8.4% growth in the equivalent period of 2012
which benefited from a leap year, and 7.8% growth in the fourth
quarter. Analysts had a consensus forecast of 5.6%. Volumes rose
2.2%, compared with 3.5% growth last year, and prices of its goods
rose 2.6%, versus a gain of 4.7%.
More than half of Unilever's revenue comes from faster-growing
developing markets like Indonesia and India, meaning it is well
protected from the West's economic woes. Demand for personal-care
items like shampoo and deodorant across Asia, Africa and Latin
America are helping the group outperform peers that are more
exposed to food sales, driven by developed economies.
Food, hit hard in the economic downturn amid gloomy consumer
sentiment and retail competition, accounts for about 30% of
Unilever's operations, which is a lower proportion than European
rivals.
Earlier this month, French dairy company Danone SA (BN.FR) said
it continues to suffer lackluster sales in recession-hit Spain and
Italy while Switzerland's Nestle SA, the world's largest food
company, reported its weakest quarterly sales performance for over
three years. U.K.-based health and hygiene specialist Reckitt
Benckiser Group PLC (RB.LN), which, similar to Unilever, has a far
smaller exposure to food, impressed the market.
Unilever's sales in North America inched up 0.3%, well short of
the 5% growth last year as demand for spreads like margarine was
hit by competition as consumers shift to cheaper alternatives.
Emerging markets saw sales growth soar 10.4%, but European sales
fell 3.1%.
By category, personal and home-care sales rose 8.3% and 9.4%,
respectively. Refreshment, which includes ice cream brands such as
Magnum, was up 2.2%, but foods dipped 0.5%.
"Developed markets growth remained sluggish. Europe faced a
particularly strong prior year comparator and whilst the overall
performance was solid, the reported growth was held back by the
slow start to the ice cream season and weakness in spreads," said
Unilever Chief Executive Paul Polman.
Still, Unilever has shown a consistent performance that
contrasts with Cincinnati-based P&G, which has only recently
seen improved trading, thanks in part to cost-cutting after years
of losing market share across key businesses. P&G Wednesday
said its third-quarter earnings net profit rose 6.4%, but sales
were at the low end of company expectations and a below-consensus
fourth-quarter outlook disappointed investors.
Unilever, which makes Ben & Jerry's ice cream as well as
Dove soap, proposed a quarterly dividend of EUR0.269 a share, up
10.7% from EUR0.243.
It continues to target profitable volume growth ahead of its
markets and sustainable operating margin improvement.
Unilever shares closed Wednesday at 2845 pence, valuing the
company at GBP36.51 billion.
Write to Simon Zekaria at simon.zekaria@dowjones.com
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